The years-long wait for some new electric vehicles is creating a reselling frenzy.
In the wee hours of the morning in October 2020, Brent Estes turned his insomnia into $35,500.
The 39-year-old Californian was in bed, scrolling through Hummers on his phone — specifically, the GMC Hummer EV, one of the rarest and most coveted machines in a parade of all-new electric vehicles. Estes happened to be awake during a tiny window in which a $100 deposit reserved the right to buy one of the first models off the assembly line. Within 10 minutes, all of the first editions were spoken for, including the one he managed to secure.
It wasn’t until almost two years later that Estes, vice president of a commercial heating and air-conditioning contractor, finally got the truck. He shelled out about $125,000 under strict instructions from his wife: Don’t let her drive it, or she might want to keep it. So Estes drove the Hummer directly to his father’s garage, where it sat for three weeks. On Sept. 28, he sold it at auction for $160,500.
“It’s kind of like winning a mini lottery,” he says. “It’s an amazing truck, but to me it’s not worth what other people are willing to pay.”
In the car world, flipping a brand-new vehicle is a practice as old as seat belts, and one historically confined to sports cars made in small batches. However, the emergence of electric vehicles has led to a flipping frenzy of sorts. Demand is at an all-time high for both mass-market and higher-end models, and factories are struggling to keep up. That means EV owners savvy or lucky enough to have secured an early edition of a highly coveted car are often choosing an immediate sale (and a handsome profit) over the street cred of being an early adopter. And the practice is picking up speed, as the staggering sales figures lure more recent buyers into immediately listing their cars.
“The collective car market and the enthusiast market has been expanding and appreciating so quickly over the last two years and this fits right into it,” says Brian Rabold, vice president of auto intelligence at Hagerty Inc., an underwriter that specializes in collectible cars. “If you wanted an electric pickup, you literally didn’t have an option until now.”
Rabold cites several factors as priming the market for short-term sales. For one, electric cars are still a relatively new phenomena, a step-change in technology arguably unlike any to date. Secondly, these battery-powered cars and trucks are arriving in concert with a crowd of online peer-to-peer sales platforms like Facebook Marketplace; Bring a Trailer (launched in 2007), and Cars & Bids (launched in 2020). These sites have created a much more liquid market for used cars, and particularly coveted collectible ones. Finally, there’s a dearth of new cars industry wide, and particularly of battery-powered models only just entering production.
General Motors Co. spokesman Mikhael Farah says those reserving early versions of the company’s hottest new cars — for instance, the Hummer that Estes flipped — generally intend to drive them. There’s no evidence of bots or other digital hijinks hoovering up car reservations like concert tickets, and Americans are actually keeping their cars longer than ever these days — the average age of a car in the US is just over 12 years, according to S&P Global Mobility. Still, for many new EV owners, the potential profit trumps the actual utility. “My take is it’s very opportunistic,” Rabold says. “I would expect a lot of these folks are going to get back on the waitlist.”
Consider Ford Motor Co.’s new electric pickup, the F-150 Lightning. In the first half of the year, Ford made about 2,000 Lightnings and at least 31 of them have sold at auction online. The Lightning has a starting sticker price just shy of $40,000 and fancier versions have been selling at dealerships for around $80,000, but the vehicles fetched an average of $97,000 on the secondhand market.
The flipping is even more frantic with Rivian Automative Inc., which assembled almost 5,000 of its R1T pickup between January and June. In March, Rivian raised the price of the truck 17% to almost $80,000, essentially locking in a profit margin for early customers who bought at the original price. At least 51 of the trucks have sold at auction online, for $106,000 on average.
“It’s just sort of a reality of the car world,” says Doug DeMuro, the founder of Cars & Bids and host of a popular YouTube series reviewing vehicles. “You can spend $100,000 and get a Rivian today or $91,000 and get one in two years. It just makes sense.”
Tesla buyers tend to hang onto their cars, in part because the company’s fine print says it will cancel any order from a suspected flipper. However, DeMuro expects Tesla’s long-promised Cybertruck will be well suited to quick-turn profits if and when it arrives.
Tesla isn’t alone in frowning on flippers: DeMuro’s site and its rash of Hummers and Lightnings incites no shortage of heartburn in Detroit’s C-suites. Not only do automakers miss out on a big chunk of potential profit when a new car is resold, but customers waiting for their own buying opportunity get chuffed watching affluent drivers skip the line.
This friction most famously came to a head in 2017, when Ford sued actor/wrestler John Cena for selling his Ford GT supercar a few months after taking delivery. Ford’s filing said Cena was among 500 handpicked buyers who were under contract to keep the vehicle for at least two years. The case was settled when Cena paid an undisclosed sum, which Ford reportedly donated to charity.
GM, for its part, recently rolled out a policy that voids the warranty on any Hummer resold within six months. At the dealer level, stores often blackball flippers from future orders, but there’s not much more they can do. “It’s definitely not something that we encourage,” says Farah. “This is to protect the brand, protect the customer and protect the dealer.”
Car flipping usually runs its course quickly: The new, new thing in the auto industry typically lasts 12 months at most, until the next model-year arrives. But EV fever is running hotter than many auto executives expected, and it will likely be years before assembly lines catch up with order books. Likewise, those hoping to pay anywhere close to sticker price for one of the new batch of EVs are in for a wait.
Ford, for example, hopes to have the capacity to make 150,000 Lightnings a year by the end of 2023, but by December 2021 it had more than 200,000 orders. GM just stopped taking orders for its Hummer EV at 90,000; by July, it had produced only 1,510 of them.
The shortage is even more stark among EV startups. Rivian said this summer it has more than 98,000 orders for its debut pickup and SUV, but is aiming to bolt together just 25,000 vehicles this year as it scrounges for parts. Around the same time, Lucid Group halved its production target for the year to between 6,000 and 7,000 vehicles.
Knowing full well the sluggish pace of shipments, the dealer who sold Estes his Hummer offered to buy it back on the spot for $150,000, but Estes declined, figuring he could do better on the open market. He was right. The winning bid went to Brett Jensen, a real-estate developer who lives just outside of Houston. Jensen recently bought a souped-up 2022 Cadillac Escalade-V, which came with a contract saying the warranty would be void if it was resold within six months, a stipulation he described as “a little goofy.” His new Hummer has no such restrictions.
“I just knew it would take forever to order one,” Jensen says. “The entire car market is crazy right now.”