Electric vehicles are said to depreciate in value 10% more than internal combustion engine vehicles over 3 years. When I looked at used EV listings recently, I was surprised to see 1 year old EVs had decreased by 25% or more in value from their original purchase price.
Electric vehicles depreciate in value by approximately 60% after three years! 10% more than their fuel guzzling counterparts.
On the plus side, purchasing a 1 year old used EV might be a good value!
Virtue signaling may play a role:
Firstly, those tech nerds who want to have new technology before anyone else are a big chunk of the market. Honestly, if you don’t own a brand new Tesla, are you even worth knowing?
Improvements in the tech in new cars may cause older vehicles to lose value more quickly:
Electric vehicles are evolving year on year, so technology from last year has already been improved on. If you’re only interested in cutting edge innovation, last year’s model is suddenly not good enough.
Each new model of EV tends to increase its range over the prior model. It might only be 10% more range but since “range anxiety” is a big deal for many, every little bit makes the newer car more attractive, lessening the demand for last year’s model.
The range issue popped up as I investigated the used market – would I want a 1 to 2 year old EV with less range than the newer model? Another concern is buyers may not have a good way to evaluate the remaining life time capacity of the EV’s battery. Do you want to start with a used EV that’s already lost 10% of its battery capacity? (Watched a Youtube video last night of someone who had bought, and knew when he bought it, that the battery capacity was running 10% less than a new version of the vehicle with a new battery.)
Anyway, the overall effect seems to be reducing demand, and hence prices, for used EVs.