Do EVs depreciate in value much faster than their conventional alternatives?
It sure seems like, in a world of rising costs, electric vehicles would be a value buy. They save money on fuel and they’re efficient. Plus, they hold their resale value. Or do they? A new study from UK’s Value My Car reveals some alarming resale price drops on EVs.
The study compares Electric Vehicles (EVs) to Internal Combustion Engine (ICE) models in an effort to discover which loses the most in value when resold. According to the team, their analysis did factor in release year prices, used vehicle prices, and calculated price changes between the selected models. It found that EV cars lose the most in price when compared to ICE counterparts. That’s pretty interesting, indeed.
Why conduct a study like this?
The aim is to understand the long-term financial implications of owning and buying an electric vehicle versus conventional options. Are they really worth the price and do they depreciate in value slower or faster? Knowing this information, the rest of us can make better-informed decisions when we go to buy new or used vehicles.
We know, right off the bat, that EVs lose value faster, but what’s the correlation between EVs and ICE cars?
As it turns out, the study discovered that EV alternatives of the same models lost price faster a majority of the time. For example, the Toyota bZ4X lost the most in price compared to its standard model. There was a 29.09% difference in price. Despite launching at a price point nearly double the Toyota RAV4, at $42,000, the resale price still dropped faster.
Overall, Nisson Leaf had the biggest price drop during the study, with buyers spending 83% less on a used EV model versus the Nissan Juke. Some of the other vehicles mentioned in the study include the Ford Mustang Mach-E, losing 15.9% in value compared to its ICE peer, the Audi Q8 e-tron, with a 24% price loss, the Mercedes EQE sedan with a 17.2% price drop, and the Volvo XC40 Recharge, with a 12.7% drop. Of course, the full list is more extensive.
In fact, when reviewing the vehicles included on the list, 16 out of the 20 total lost value. That means only four total depreciated slower than their ICE alternatives: BMW i4, BMW i3, Chevrolet Blazer EV and Toyota bz3.
Are EVs a poor investment?
The takeaway here isn’t necessarily that EVs or modern vehicles are a poor investment. But it does highlight that if you’re factoring in value, alone, you might want to shop for something different. At least for the foreseeable future.
A spokesperson from Value My Car explains it best. “While new electric vehicles often cost more than gas cars upfront, their prices drop much faster in the used market — creating good deals for second-hand buyers.”
In other words, if you plan to buy used, it works in your favor.
“This pattern shows up clearly in cars like the Nissan Leaf, which loses over 80% of its value used. The rapid price drops likely happen because EV technology keeps improving quickly, making older models less attractive, but this creates an opportunity for buyers who want to try an electric car without spending too much.”
Study and story originally featured by UK-based Value My Car.
