Why EVs lose value faster than gas cars and why that could be changing
Electric vehicles are cheaper to maintain than internal combustion engine vehicles, but they tend to lose money quickly.
It varies by model, but in general, electric vehicles lose 13% more value over five years.–Some have fallen in value even faster, according to iSeeCars, which tracks the used car market.
It’s enough to make a new car buyer hesitate to worry about how much they’ll get back when they try to sell the car. In addition, automakers have said they are trying to broaden the appeal of EVs to more cost-conscious mainstream shoppers. Until now, the EV market has focused on high-priced vehicles targeted at luxury buyers.
“New car shoppers, especially wealthy ones, are less price sensitive,” said Karl Brauer. Executive analyst for iSeeCars. “They don’t care about depreciation. Used car shoppers don’t. Every used car buyer is value-oriented by the very nature of being a used car buyer.”
There are a few big reasons why electric vehicles are losing more value.
Historically they have been more heavily promoted; This tends to hurt resale values because a second-hand buyer won’t pay as much for a car that has – or may even get – a discount. Incentives hurt resale values of all kinds of cars, but EVs received some additional incentives, including federal government rebates that have now expired.
EVs received approximately twice the incentives such as gas-powered cars – including those arriving from dealers and automakers in August, According to Cox Automotive. Even this was a decrease from the record set in July.
There is also the rapidly changing pace of technology. For example the maximum EV range available more than twice The average range has tripled in the last decade, according to the U.S. Department of Energy. Some evidence suggested longer range EVs It tends to depreciate more slowly.
Despite all the advances, EVs remain a relatively niche product and their share of the market remains small, although it is gradually increasing. According to data provided to CNBC from Motor Intelligence, electric vehicle sales in the US, excluding hybrids, reached 10.5% market share in the first nine months of the year.
However, this small share limits their marketability.
There are big changes ahead of us. A boom in used EVs is inevitably on the way, and the mix of models will likely be different, too.
“You know, we have $30,000 to $35,000 EVs from Ford, from Chevy, from the domestic market,” said Alex Yurchenko, general manager of appraisal services at J.D. Power. “So now you have a much better mix of vehicles in terms of affordability.”
Watch the video to learn more.
