Electric vehicles (EVs) differ substantially from conventional petrol and diesel-powered automobiles so people naturally want to understand how depreciation impacts the value of these vehicles. In short, yes — electric vehicles do lose value over time. However, there’s more to the story, especially when we understand what depreciation really means.
What is Depreciation?
The decrease in value which occurs when a new product transforms into a second-hand item is known as depreciation of that asset. The car industry determines depreciation through residual value, which is the percentage of the car’s original price that remains after a certain period or mileage.
How Do Electric Cars Depreciate?
Electric cars maintain their value better than conventional petrol or diesel models. The current market value retention for EVs stands at 49% even after three years or 36,000 miles which is higher than the average for traditional vehicles. This slower depreciation of value stems from the expanding market interest in EVs caused by the upcoming 2035 ban on new petrol and diesel vehicle sales and an ever increasing fuel prices.
Furthermore, the worldwide semiconductor shortage has disrupted new vehicle assembly lines thus pushing customers toward used car markets which has led to increased prices across all vehicle types including electricvehicles.
Electric car depreciation will generally be due to:
1.High mileage
2. Age
3. Interior and exterior cosmetic condition
4. Service history
5. Battery condition/age
6. EV type (hybrid, full etc.)
In addition, government incentives along with clean air zone regulations and changing consumer perceptions about emissions have majorly boosted the residual value of EVs. This trend is expected to continue, making electric cars a more attractive option for long-term ownership.
Reference- Inside EVs, Electrek, The Verge, Forbes, CarWow