Do Electric Cars Depreciate?
The automotive industry now finds itself in the midst of a quiet revolution. It wasn’t so long ago that the electric car was a distant, impractical fantasy; now it seems like an inevitability that’s certain to transform the way we think about getting from one place to another.
This transition is sure to have considerable implications. Is your local filling station going to adapt? Are you going to need to install a charging station at home? What’s going to happen to your insurance?
Among the more pressing of these questions concerns depreciation. If you make the switch to an electric car now, how well is it going to hold its value? What’s more, what factors might we consider when we’re making a buying decision? While measures like GAP insurance can hold off the cost of depreciation, it’s your choice of vehicle that’ll make the biggest difference.
Do EVs depreciate more than petrol and diesel cars?
According to data from CarWow, electric cars hold around 48.9% of their value after three years or 36,000 miles. For traditional petrol and diesel cars, this figure is around 40%. We should bear in mind, however, that this is an average of all vehicles, and we might expect to see significant variance once we start looking at particular niches.
What factors contribute to depreciation?
We’ve always been told to look at age and mileage as an imperfect measure of a car’s condition. And the same applies to electric vehicles.
The very first EVs to hit the market had only a small base of potential drivers, who saw the value in the long-term, even if the technology wasn’t quite there yet. Battery capacity, for example, was an ongoing concern, and vehicles from this era might struggle to appeal to many road-users, who don’t want to find themselves stranded.
Nowadays, EVs offer performance that’s roughly on a par with their ICE-driven cousins. As such, any argument that the EVs of today will be quickly supplanted by new and improved editions applies equally well to traditional vehicles. In fact, there will come a point where petrol and diesel depreciate quicker, because the infrastructure to support them will have been rolled back because the demand isn’t there to support it.
Which EVs hold their value?
Generally speaking, if you’re spending big on a high-performance EV from a big-name brand, like Tesla, then you can expect less in the way of depreciation. Sportier models with longer battery life tend to flourish. The Model 3, the Model X, and the model S, all from Tesla, have all proven resistant to depreciation. The same goes for the Polestar 2, which is made by a sister company of Volvo.
Which EVs depreciate fastest?
Conversely, it’s the smaller electric cars, like the Fiat 500e and the Smart Fortwo Cabrio, which depreciate the quickest. As such, if you’re investing in these with a view to saving money, then you might consider just how much extra you’ll be writing off thanks to lost value.