The Truth About EV Depreciation
A guide investigating the rate of electric vehicle (EV) depreciation and how it compares to internal combustion engine (ICE) cars.
Last updated: Aug 02, 2024 • 4 min read
Summary
Yes, EVs tend to depreciate more quickly than ICE vehicles, but this gap is closing, and is set to match their depreciation level over time. There are several factors which contribute to this depreciation which will be outlined throughout this guide.
Unpacking EV depreciation
Buying a brand new vehicle, whether it’s an EV or not, is a big financial decision for most of us. You’ll likely spend hours researching, test driving and thinking about a potential purchase. If you plan to sell your car in a few years, understanding the factors that impact its value is important. In this guide, we’ll be looking at EV depreciation, one of the key factors that will dictate the value of a used car.
Do EVs actually depreciate faster than petrol or diesel cars?
Historically, EVs tended to depreciate much faster than petrol cars, mostly due to concerns over battery life and technology obsolescence. However, the gap is narrowing.
Advances in battery technology, increasing public charging infrastructure, and growing consumer acceptance have all played a role in improving the resale value of electric cars. With the upcoming ban of new ICE car sales in 2035, many drivers are wondering if they should make the jump to electric driving or stick to fuel-powered cars for now.
According to data from AutoTrader, EV depreciation within the first 12 months is higher than for petrol or diesel cars. After this point, the rate of depreciation slows significantly, matching that of ICE cars over time.
Factors that impact the value of your EV
Certain factors impact how well an EV holds its value. Many of these points also apply to petrol and diesel car, but some are unique to electric cars:
Mileage
Number of owners
Service history
Brand and model
Condition
Battery health
Modifications
Mileage
A higher mileage typically leads to a lower resale value. Cars that have covered many miles experience more wear and tear, increasing the chance for costly repairs and maintenance.
Number of owners
EVs that had fewer previous owners tend to keep more of their value than cars with many ex-owners. A history of multiple owners isn’t always a bad thing, but changes in ownership after just a few months or years can be a sign of serious problems with the car.
Service history
A well-documented service history without gaps provides reassurance that an EV has been maintained frequently. Regular servicing is essential to avoid issues and keep the car in good condition, which brings us to the next point.
Condition
An EV that appears to be in good or even excellent condition will always attract a higher resale value than a car of the same model and make in bad condition.
Battery health
For EVs, battery health and remaining capacity is key when it comes to depreciation. A healthy batter with high capacity, so one that can hold its charge well, will be worth significantly more than an electric car with a battery in poor condition.
Brand and model
Certain brands and models are known for their good quality, durability and long life, which can increase demand and the price buyers are willing to pay.
Modifications
Modifications typically narrow the pool of potential buyers and can decrease resale value. Although less common, some EV modifications can fetch sellers a higher selling price, but this is very much dependent on the modification and market.
Are there any EVs that don’t depreciate faster than petrol or diesel?
Certain EVs tend to hold their value better than some petrol and diesel cars. Generally, EVs that depreciate at a lower rate than the average fuel-powered car are:
High-performance electric cars like the Porsche Taycan
Popular make and models like the Tesla Model 3
- Premium EVs like the Mercedes EQE or BMW iX