With the boycott of diesel and petroleum vehicles by 2035 driven by governments worldwide, EVs are getting more and more attention today. While we’ve seen the sales of used electric vehicles increase. Some have fallen rapidly in resale value compared to their traditional counterparts. As electric vehicle options are gaining in popularity worldwide, and new EVs tend to have a higher price tag typically, all comes to the question: how well do electric vehicles hold their resale value?
Do used electric vehicles depreciate faster than petrol cars?
In general, EVs are underperforming in holding their resale values compared to their gas-powered counterparts. On average, vehicles retain 60% of their value after three years of use, yet EVs depreciate faster and only retain 48.9% of their value after three years or the first 60,000 km.
Nevertheless, the depreciation factor on average electric vehicles can change. As there are other two important elements while valuing an electric vehicle. One is with the government incentives that encourage people to buy electric vehicles, which will result in less value depreciation over the period. The other factor is the overall expenses of EV ownership, which is excessively less expensive than a gasoline vehicle.
In addition, the residual values varied by EV models. For example, the top-of-the-line EVs produced by Mercedes and Tesla can retain their resale value for longer than most other electric vehicles. These premium brands can retain 60% of their value after three years or the first 60,000 km. Also consumer adaptation for select EV models, like the Toyota Prius, also has a stronger return.
What impacts used electric vehicles’ resale value?
As we mentioned, different government incentives have drastically impact on EV resale values. Just because those rebates are not a true cost at acquisition, they are typically be removed from the residual value and resulting in a lower residual. That means, the residuals of used electric vehicles are likely undervalued and makes buying a used electric vehicle become very appealing for car shoppers.
On the other hand, EVs are more likely to retain their value with the strong demand rising dramatically. With the development of EV technology thriving rapidly, the early indicators of EV depreciation aren’t likely to last.
As when EVs were newly introduced to the vehicle industry, there were not enough demands. The operating ranges of older EV models were also limited which plague owners of older EVs. While today’s EV models can easily operate a range over 300 kilometers, they are more likely to hold their value at the best in the resale market. That also indicates EVs with a longer range are more likely to retain their values.
The battery range could be an important factor in determining a used electric vehicles’ resale value. Diminished battery performance will have a direct impact on the value of a used electric vehicle. While some automakers make better batteries than others, EV’s battery cooling system is also one of the important factors that help to preserve battery performance. Liquid cooling helps to preserve battery health, and also stronger batteries can hope up longer range. For example, Tesla’s batteries can hold up more than 90% of their full capacity after driving 320,000 kilometers, which means the battery degradation is less of an issue, and that’s one of the reasons that a used Tesla holds a higher resale value.
What’s next?
The reduced operational cost is already making electric vehicles a desirable choice for car buyers. The lowest maintenance and fuel costs are another plus to EV ownership. In fact, electric vehicles and Hybrids have less chance of wear and tear. Thanks to the regenerative braking feature that reduces the need to change brakes, and also because EVs have fewer moving parts in the motor. All these factors contribute to the great savings on operating an EV.
With the increase in demands, longer battery range, and updating technology. Electric vehicles will turn out to be more and more competitive in holding their resale value in the foreseeable future. Meanwhile, used electric vehicle buyers can find some outstanding EV deals among the myriad models at Carnex.
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