Electric cars are cheaper to maintain than cars with internal combustion engines, but they tend to lose money faster.
While it varies by model, EVs typically lose 13% more in value over five years than the overall market, with some plummeting even more rapidly, according to iSeeCars, which tracks the used car market.
If you’re a new car buyer and you’re worried about how much you’ll get back when you try to sell your car, you’ll be hesitant. Additionally, the automaker said it is looking to broaden the appeal of EVs to more cost-conscious mainstream shoppers. Until now, the EV market has centered on high-priced cars aimed at luxury car buyers.
“New car buyers, especially wealthy individuals, are not very price sensitive,” said Karl Brauer, executive analyst at iSeeCars. “They don’t care about depreciation. Used car buyers don’t. All used car buyers care about value, which is the nature of used car buyers.”
There are a few big reasons why EV depreciation is high.
Historically, these vehicles have been given greater incentives, but resale value tends to suffer because used buyers won’t pay as much for a car that has or could have received a discount. Incentives hurt the resale value of all types of vehicles, but EVs receive some additional incentives, including federal rebates that have already expired.
Cox Automotive said EVs received about twice as much incentives as gasoline-powered vehicles, including incentives from dealers and automakers in August. This was still below the record set in July.
There is also rapid change in technology. For example, the maximum range of EVs has more than doubled over the past decade, and the median range has tripled, according to the U.S. Department of Energy. Some evidence suggests that long-range EVs tend to depreciate more slowly.
Despite all the advances, EVs remain a relatively niche product with a small but growing market share. U.S. EV sales, excluding hybrids, reached a market share of 10.5% in the first nine months of this year, according to data provided to CNBC by Motor Intelligence.
However, its small share limits its marketability.
Big changes await us. The explosive increase in used EVs is inevitable, and the model mix is likely to be different than before.
“The domestic market offers EVs from $30,000 to $35,000, such as Ford and Chevrolet,” said Alex Yurchenko, managing director of valuation services at J.D. Power. “So we now have a much better mix of vehicles in terms of affordability.”
Watch the video to learn more.
