Electric vehicles (EVs) have been gaining popularity due to concerns about climate change and rising fuel costs. However, what many people don’t realize is the harsh reality of electric vehicle depreciation. In the UK, various new electric cars can lose up to 50 percent of their value in just the first 12 months. This staggering depreciation rate was revealed through data provided by Cap HPI, a respected UK online car resource. For example, the Audi e-Tron GT plummeted by 49 percent in value, while the Ford Mustang Mach-E fell by 52 percent after just one year. These figures are undoubtedly alarming for those considering buying a new EV, especially if they plan to resell it within a short timeframe.
Interestingly, mileage does not have a significant impact on the depreciation of electric vehicles. In a study conducted by Cap HPI, it was found that doubling the mileage from 10,000 to 20,000 miles in the first year only resulted in a marginal decrease in trade-in value. For example, a Polestar 2 with 20,000 miles was only worth £975 less than one with 10,000 miles. This goes to show that factors like battery size and trim level have a more substantial effect on depreciation than mileage in the first year. It’s a similar story with the Porsche Taycan, where a 4S model with 20,000 miles only lost an additional £2,650 compared to one with 10,000 miles.
One factor that could potentially slow down the depreciation of electric vehicles is the ability for manufacturers to update and upgrade the car’s software over time. Tesla, in particular, is known for pushing out major user interface upgrades and adding new features via over-the-air updates. Other manufacturers, like Jaguar and Polestar, have also introduced software updates that improve the range and functionality of their EVs. This ongoing support and enhancement of software features could help maintain the value of electric vehicles over the long term, making them a more attractive purchase for consumers concerned about depreciation.
When comparing the depreciation of electric vehicles with gas-powered vehicles, an interesting trend emerges. In the UK, a gas-powered Audi Q7 55 is worth 42 percent more than an electric Audi e-tron 55 SUV after one year, despite costing less when new. This disparity in resale value is not limited to luxury vehicles but also applies to lower-value cars like the Volkswagen Golf. After three years and 30,000 miles, a gas-powered Golf has a 46 percent price premium over an electric Golf. These findings suggest that electric vehicles lag behind their gas-powered counterparts in terms of resale value, even when considering factors like mileage and age.
US Market Insights
In the US, the depreciation of electric vehicles follows a similar pattern to the UK market. For example, a 2022 Porsche Taycan Turbo with 10,000 miles was worth about $106,000, significantly lower than its original cost of $156,000. This depreciation rate is consistent with the UK data, highlighting the challenges faced by electric vehicle owners in both markets. Despite the growing demand for EVs, the rapid loss of value remains a major concern for potential buyers and current owners alike.
Overall, the harsh reality of electric vehicle depreciation underscores the importance of carefully considering the long-term costs associated with owning an EV. While the environmental benefits and lower operating costs are attractive, the steep depreciation rates can be a significant financial burden for many consumers. As the electric vehicle market continues to evolve, manufacturers and policymakers must address the issue of depreciation to ensure the widespread adoption of EVs in the future.