Electric car depreciation explained
Last updated October 12, 2022
With the government planning to ban the production of new petrol and diesel vehicles from 2030, you may now be much more open to the idea of switching to an electric vehicle, but might be wondering how they compare to petrol and diesel models. One thing you’ll likely consider is the rate at which electric cars depreciate in comparison to their less eco-friendly counterparts - and the effect that this will have on an EV car valuation.
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What is depreciation?
Car depreciation is the gradual decrease in the value of a vehicle over time.
Some assets appreciate in value; jewellery may appreciate in value due to its rarity, while a house’s value will often grow due to factors such as market growth and improvements. However, cars’ value almost always depreciates after they are sold for the first time.
If potential resale value is something you take into account when choosing a new car, it’s certainly worth considering the rates of electric car depreciation. It will make things much simpler when the time comes to sell your electric car.
Do electric cars depreciate?
Electric cars depreciate just as non-EVs do, though they tend to retain their value more effectively than petrol and diesel cars. This is due to the demand for electric cars, which is currently at an all-time high thanks to the rising costs of petrol and diesel - and the 2030 production ban.
What is the depreciation rate of electric cars?
A typical new car can lose as much as 60% of its initial value within the first three years of ownership. However, the value of a new electric car will usually depreciate at a slower rate than its petrol or diesel counterparts.
This is due to current high fuel prices, which have led to an increased demand for electric vehicles, as they are significantly cheaper to run. EVs also have a better reputation among eco-minded drivers.
As the Government’s 2030 ban on the production of petrol and diesel cars approaches, mass-adoption of EVs is expected. Bear in mind, that as electric vehicles become more and more common, they will start to depreciate at the same rate as non-EVs.
EV depreciation factors
If you are looking to reduce car depreciation, keep an eye on the factors that can cause accelerated electric car depreciation.
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High mileage
You can expect a lower resale price if an EV has a particularly high mileage.
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Age
All cars depreciate more the older they get, so an older EV will be worth less.
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Battery condition
Batteries that are old or indicate very low voltage when tested will cause an increase in electric car depreciation.
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EV type
Hybrids depreciate at a slower rate than cars that rely on petrol or diesel, but at a faster rate than an equivalent fully electric model.
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Service history
It will negatively impact your ability to sell your car for a good price if you don’t have a full service history available.
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Cosmetic condition
Keeping your car’s exterior and interior in good condition is crucial to retaining its value.
Electric cars vs petrol
Petrol cars usually depreciate at a higher rate than electric vehicles, anywhere between 15-35% in the first year. By the third year, this figure can reach 60% or more. Conversely, EVs typically depreciate by around 49% at the three-year mark – and some models even depreciate less than 40%.
Although a small number of EVs depreciate at a rate that’s comparable to petrol cars, this is due to factors such as low demand and a lack of consumer confidence in electric models that are relatively new to the market.
How long does EV battery last?
The average electric car battery should last around 10 years, though high-end models may include batteries with a life of up to 20 years, if they are used and cared for properly. To prevent issues with your EV battery, you should not leave the battery flat for extended periods of time and should always allow your car a cooling off period before charging.
What electric cars hold their value?
Some makes and models of electric car depreciate at a slower rate than the industry average, retaining more of their value for longer.
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Porsche Taycan
The Taycan is the current model on the market with the slowest EV depreciation rate, losing an average of just 37% of its value within the first three years.
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Tesla Model 3
Several Tesla EVs offer reduced depreciation rates. The Model 3 retains its value the most effectively, depreciating an average of just 40% in the first three years.
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Polestar 2
Polestar exclusively produces electric vehicles, with depreciation clearly considered in the design of each model. The Polestar 2 loses an average of just 42% of its value within its first three years.
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Hyundai IONIQ
The Hyundai IONIQ loses an average of 48% of its value within the first three years, giving it a reduced depreciation rate when compared to the brand’s petrol models.
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BMW i3
The BMW i3 retains around 50% of its value after the first three years, which is the average depreciation rate of EVs across the market.
What are the fastest-depreciating electric cars?
Below are some of the electric cars that depreciate at an accelerated rate compared to others within the EV market.
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Smart Fortwo Coupe
This city car is aimed squarely towards city drivers with easy access to charging points, limiting its appeal elsewhere and leading to a depreciation rate of 58% in the first three years.
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MG MG5
The MG5 has an average depreciation rate of around 59% following the first three years, making it one of the fastest-depreciating electric SUVs on the market.
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Nissan E-NV200
This vehicle is available as both a traditional van and an MPV (Multi-purpose Vehicle), though both versions have limited appeal to a wider audience. This low demand for second-hand models has led to the E-NV200 depreciating at a rate of around 60% in the first three years.
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Fiat 500
The newly electric Fiat 500’s depreciation rate of 62% may be alarming to hear, but this is based on the traditional version of the model. It’s more than possible that the 500’s depreciation rate will improve as the fully electric model gains popularity.
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Citroën e-Berlingo
Unfortunately, despite being a good car for transporting people and items, the electrified Berlingo has one of the worst depreciation rates among electric vehicles. It’s expected lose up to 68% of its new value at the three-year mark.
