EV values can drop faster than an ICE on an electric heating element. Nor'adila Hepburn presents the research and story. Your responses to Nar'adlia findings are appreciated!
Nor'adila writes, "When you're tired of paying inflated prices at the gas pump for your car, buying an electric one can seem appealing. However, what you may not realize is that though they can save you a ton of money, maybe in the thousands, depending on what type of car you have, the buck stops there. For many EV owners, it's no secret that while electric cars save money on fuel and can be snagged at a decent price — they depreciate at a lightning-fast rate.
And the video is another point of view from EV Opinion!
According to Car and Driver, EVs typically lose more than $5,700 per year, for the first five years on average, and will end up costing owners about $28,500 in five years. Compare this to a gas-powered car, which typically loses less than $3,200 per year or $16,000 over five years. The reality is that for most EV owners, depreciation is an expense that has to be factored into your purchase decision. Let's take a closer look to understand why these expensively-priced cars have a hard time holding their value.
Depreciation is like taking money out of your wallet, and setting it on fire — every single day. You don't see it as a loss in the beginning, but after a while, you'll end up paying out the same amount you saved previously by not using gas. So, what causes EVs to depreciate?
Surprisingly, one of the main factors that leads to depreciation are incentives given to new EV owners to help them buy their vehicle in the first place. Since 2010, the U.S. government has offered tax credits up to $7,500 for anyone wishing to purchase an electric vehicle (via CNBC). While this is good, it causes the price of the vehicle to tank when it's resold.
The second factor is demand. Although interest in electric cars is rising swiftly, that has not topped sales of regular fuel-powered cars. Buyers still want gas-powered cars, although this is predicted to flip in the coming years (via Axios).
The third factor is battery capacity. EV batteries are notoriously for having a limited lifespan, which affects a car's value if it is not kept in pristine condition. Around the eight-year mark, most electric car batteries have degraded and need to be replaced with a new one, according to Forbes. Finally, changing technology has to be taken into account as well. Rapidly evolving EV technology makes the price go down and accelerates depreciation for older models, each time a new model is released.
According to industry experts, EV cars that have higher ranges (200 miles and over) and improved battery technology seem to have the highest resale value (via MyEV). This could be a reason why Tesla models tend to have the highest resale prices, because they get the most miles per charge.
While most other EVs will depreciate after several years, the Tesla Model 3 is an exception. Statistics show that not only does the Tesla Model 3 have a resale value that is five times better than other EVs on the market — it also retains 90% of its total value after three years (via ElectricTrek). Furthermore, when compared to other cars (EVs and gas-powered cars), its resale value was four times better, according to InsideEVs. Another reason why Tesla has a slower rate of depreciation is that potential Tesla buyers can no longer get federal tax credits because the manufacturer has already sold 200,000 cars and are no longer eligible to be a part of this incentive (via Tesla).
How can buyers reduce depreciation on their car?
If you are an EV owner or considering buying one soon, there are a couple ways to prevent depreciation so you get the most value. One common way is to buy or lease a second-hand electric vehicle. Buying a used EV, preferably one that is one year old, is a way you can lessen depreciation on your vehicle. Previous owners have already eaten the bulk of the depreciation, so you wind up paying less for it. Leasing a pre-owned EV also reduces depreciation costs. The vehicle already has a lower value, which automatically leads to cheaper monthly payments (via Jerry).
Maintaining the vehicle is another good way to ensure that your EV has a higher resale value. Buyers are more likely to pay extra for a used vehicle that is properly maintained and has the service records to show it.
Finally, if you want your EV to resell at top dollar, you should strive to keep the interior and exterior of your car spotless. If you don't mind spending extra money, it's worth it to spring for professional detailing services too, so your car is in pristine selling condition. Appearance matters when it comes to selling your car — buyers will pay up anywhere from 10 to 20% more for a car that looks well-kept than one in bad condition."
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