Why Do EVs Deprecate So Fast and What It Means for Buyers

The electric vehicle (EV) market has been growing rapidly, but one thing that's been puzzling buyers is why EVs seem to depreciate so fast. According to a study, EVs lose an average of 47% of their value within the first three years of ownership.

This is a significant difference from traditional gasoline-powered vehicles, which typically lose around 20% of their value over the same period. For example, the Tesla Model 3, a popular EV model, has been known to depreciate by as much as 50% within the first three years.

One reason for this rapid depreciation is the high demand for EVs, particularly from early adopters and tech-savvy buyers. This demand drives up prices, making it difficult for owners to sell their vehicles for a good price later on.

Electric cars depreciate quickly, and understanding the factors that contribute to this depreciation is key. According to various studies, electric vehicles depreciate faster than gas-powered cars, with some reports suggesting they lose up to 52% of their value within the first three years.

High mileage, age, and interior and exterior cosmetic condition are all major factors affecting depreciation. In fact, electric cars can lose 60% of their value within the first three years, with the most significant impact occurring within the first year. This is due in part to the fact that electric cars are subject to the same factors of car depreciation as petrol or diesel cars, including high mileage, age, and cosmetic condition.

The type of electric vehicle, such as hybrid or full electric, can also impact depreciation. Additionally, factors like service history, battery condition, and government incentives can also play a role. For example, government grants can persuade people to buy new electric cars, reducing demand for used EVs.

Note: The table above does not provide specific percentages for each factor, but rather lists the factors that contribute to depreciation.

Car depreciation is a natural process that affects all vehicles, regardless of their type or age. Electric cars, in particular, are subject to the same factors that contribute to depreciation as petrol or diesel cars.

High mileage is a significant contributor to car depreciation, with electric cars losing value as the miles accumulate. Age is another factor, with cars losing value as they get older and newer models are released.

Interior and exterior cosmetic condition also play a role in depreciation, with well-maintained cars retaining their value better than those with damage or wear and tear. Service history is also important, with cars that have been regularly serviced holding their value better than those that haven't.

Battery condition and age are unique factors that affect electric car depreciation. The type of EV, whether it's a hybrid, full electric, or plug-in hybrid, also impacts depreciation.

Here are some key factors that contribute to electric car depreciation:

These factors can impact the resale value of an electric car, with some brands, like Tesla and Mercedes, bucking the trend and retaining their value better than others.

Brand reputation plays a big part in retaining an electric car's value.

Tesla has a good track record, which is why its models hold value well.

The entry-level Model 3 has such high demand that Tesla can charge a premium.

Brand image is everything in business, and Tesla's desirability is a major factor in its high demand.

Electric cars from Tesla and Mercedes can buck the trend when it comes to the 60% lost value rule.

Vauxhall is doing well at staving off EV depreciation because it offers an affordable, family-friendly entry in the UK's current range of electric cars.

Car battery lifespan is a crucial factor to consider when buying an electric vehicle. It's estimated to last between 10-20 years, with some batteries outlasting the car itself.

Using a quality and proper EV charger can help you get the most out of your battery. This means using a charger that can provide a powerful charge without sacrificing your battery health.

Extreme temperatures, overcharging, and rapid charging can all see your battery degrade in condition faster. It's essential to take good care of your battery to ensure it lasts as long as possible.

Here's a breakdown of the factors that can affect your battery's lifespan:

Manufacturers are even mandated by law to apply an 8-year warranty on EV batteries, which is equivalent to 125,000 miles. This means that if your battery stops working within that time period, the manufacturer should cover the costs of a replacement.

Electric cars that hold their value well include brands like Jaguar, Mercedes-Benz, Fiat, and Volvo, which are all planning to phase out non-electric cars by 2035.

According to cap hpi, some of the best electric cars for retaining value include certain models from these brands.

Teslas hold value well due to the brand's good track record and high demand for their models, particularly the entry-level Model 3.

In fact, the Model 3 has such high demand that Tesla can charge a premium for it.

Electric cars are thought to retain about 48% of their original value after three years, which is marginally ahead of combustion engine counterparts.

Electric cars depreciate more rapidly than gas-powered cars, with some studies suggesting they lose up to 52% of their value within three years.

According to the AA, a new car will lose around 60% of its value after its first three years at a mileage of 10,000 miles a year. This is a fact of life for all cars, not just electric ones.

In contrast, hybrid-electric vehicles have shown much better value retention, highlighting the growing challenges that BEVs face in the secondhand market.

Data from the Autovista Group shows that battery-electric vehicles are depreciating more rapidly than ICE cars in several European markets. This is evident in countries like Austria, Germany, Italy, Spain, Switzerland, and the UK.

On average, both petrol and diesel cars lose 60% of their original value after three years or 36,000 miles. However, electric cars lose up to 50% of their original value after three years.

The industry average suggests that EVs hold 40% of their original value after three years or 36,000 miles, which is lower than ICE vehicles.

Electric vehicles generally experience depreciation from the moment of purchase, with the most significant impact occurring within the first three years of ownership.

In comparison, SUVs lose 39.7% of their original value and trucks can see a 34.3% drop within three years.

It's worth noting that electric cars are becoming more affordable, with more electric cars sold in 2020 alone than in the whole of the previous year.

The second-hand market for electric vehicles is growing, despite initial depreciation challenges. Falling prices present an opportunity for buyers who may not have been able to afford a new EV.

As battery technology becomes more reliable and public confidence in electric vehicles grows, depreciation rates are improving, making EVs more competitive in the used car market. This is great news for second-hand buyers.

From a £5,000 Renault Zoe to a $30,000 Jaguar I-Pace, there are amazing deals to be had in the second-hand EV market. And, what's more, EV batteries are lasting longer than expected.

Replacing an EV battery out of warranty costs between $6,500 and $20,000, which is a significant expense for many owners. This fear of costly battery replacement lingers in the mind of any driver whose EV is no longer protected by its manufacturer’s battery warranty.

Battery failure is rare, and many aftermarket warranty providers now include EV battery cover. This gives buyers more peace of mind when purchasing a used EV.

The second-hand EV market is relatively new, making it hard to determine whether EVs really do depreciate faster or sell less than traditional cars. However, studies suggest that electric vehicles generally experience depreciation from the moment of purchase.

On average, electric cars lose up to 52% of their value just after three years, compared to ICE vehicles' 39.1%. This means EV owners can expect a 60% drop in their car's value in that time.

The industry average suggests that EVs hold 40% of their original value after three years or 36,000 miles.

Electric cars are not immune to depreciation, and they can lose a significant amount of value over time. According to the AA, a new car will lose around 60% of its value after its first three years at a mileage of 10,000 miles a year.

However, electric cars have been performing well in recent times, retaining value for longer due to increasing demand and improving performance. Brands like Jaguar, Mercedes-Benz, Fiat, and Volvo are planning to go all-electric by 2035, which will likely drive up demand and value.

If you're planning to keep your electric car for a long time, buying a new one might be a good option. But if you're looking to sell soon, buying a new EV can be a risky financial decision, as you may end up "underwater" on your car loan.

Electric cars are retaining value surprisingly well, with some brands holding onto 48% of their original value after three years. This is marginally ahead of their combustion engine counterparts.

Brands like Jaguar, Mercedes-Benz, Fiat, and Volvo are planning to ditch non-electric cars by 2035, which will likely drive up demand and value for electric vehicles.

Electric cars are also becoming the most affordable type of car, with more being sold in 2020 than in the whole of the previous year. This increased demand will help them retain their value.

The government's goal of having us all driving electric cars by 2035 is also a guarantee of future demand, which will help electric cars hold their value.

However, it's worth noting that electric cars do depreciate, with some studies suggesting they lose up to 52% of their value just after three years. This is compared to ICE vehicles, which lose 39.1% in the same time frame.

The industry average suggests that EVs hold 40% of their original value after three years or 36,000 miles. This means EV owners can expect a 60% drop in their car's value in that time.

If you're planning to keep your new EV for a long time, then buying is a great option. However, if you think you'll be selling anytime soon, buying a new EV can be a very risky financial decision.

Buying a new EV in 2024 without a hefty down payment or trade-in can put you at significant risk of becoming 'underwater' on your car loan.

Leasing an EV is a low-stress way to try out the EV lifestyle without the long-term commitment of buying.