If you haven't come across the term 'depreciation' in relation to cars, it relates to the gradual decline in value that vehicles experience over time. It's an important factor in determining the overall cost of owning an electric car. As electric vehicles (EVs) gain popularity, understanding their depreciation rates and factors becomes crucial for those looking to sell their car.
In this guide, we will delve into the world of electric car depreciation, exploring the factors that influence it and how this compares to other vehicles, as well as:
What is car depreciation?
What factors contribute to EV depreciation?
How fast do EVs depreciate?
How long do EV batteries last?
Does EV brand matter when it comes to depreciation?
Car depreciation refers to the decrease in a vehicle's value due to a range of factors, and is a natural and inevitable occurrence that affects all vehicles regardless of make or model, including electric cars. It is also considered as one of the largest expenses associated with owning a vehicle.
Depreciation varies from car to car and can differ based on market conditions and individual circumstances. Understanding car depreciation can help car owners in making well-informed decisions, including identifying the best time to sell or trade-in for the greatest financial benefit.
What factors contribute to electric car depreciation?
Several factors contribute to electric car depreciation. These include the rapid advancement of EV technology, which leads to newer models with enhanced features and longer ranges. Additionally, the availability and expansion of charging infrastructure, government incentives, and the general market demand for electric vehicles also influence their depreciation rates.
EV cars are currently going through an exciting phase of rapid progression, leading to the frequent release of newer models with improved features and longer ranges. On top of increased availability of charging infrastructure, tax incentives, and higher general market demand, depreciation rates are constantly changing. Other factors for car depreciation include:
How fast do electric cars depreciate?
The rate at which electric cars depreciate can vary depending on various factors, including the model, battery technology, overall market conditions, and demand.
Generally speaking, electric cars tend to depreciate quickly in their early years of ownership, but then (like most cars) will level off as they age. However, it's worth noting that electric cars with larger ranges or advanced features may hold their value better than entry-level models.
On average, electric cars depreciate by up to 50% of their original value, after three years and 36,000 miles of driving.
Electric cars are however maintaining their value for longer, thanks to the current exemptions from vehicle excise duty, congestion charges, and low-emission zones. This is great news, as it means that owning an electric car can be even more cost-effective and environmentally friendly.
How long do electric car batteries last?
New electric car batteries typically come with warranties of approximately eight years and 100,000 miles, which provides a good indication of the battery's reliability and longevity"
Depending on usage, charging patterns, and environmental conditions, you can get many more years out of an EV battery.
It is also important to note that advancements in battery technology continue to extend their lifespan. Other factors that affect EV batteries lifespan include
The type of battery (lithium-ion or solid state)
Battery management system
Does brand matter when it comes to depreciation?
Brand perception can play a role in the depreciation of electric cars. Established brands with a solid reputation for reliability, performance, and customer satisfaction may experience lower depreciation rates compared to lesser-known brands or new entrants to the EV market. However, factors such as…
Overall market demand
…also significantly influences depreciation.
Is there a difference between EV depreciation compared to combustion and hybrid vehicles?
Electric cars typically experience faster initial depreciation compared to combustion and hybrid vehicles due to factors like range anxiety perception, technological advancement, and battery degradation. However, as EV technology advances, charging infrastructure expands, and market demand increases, electric cars may hold their value better. This trend is expected to continue as more consumers embrace electric cars.
Do electric cars have good resale value?
Electric cars generally have better resale value than traditional combustion vehicles. Factors such as lower operating costs, reduced emissions, and increasing consumer interest in sustainable transportation contribute to their appeal in the used car market. However, individual models and market conditions can still impact the resale value of electric cars.
Selling your EV at the right time?
Factors such as rapid technological advancements, charging infrastructure expansion, and market demand play significant roles in electric car depreciation rates. While electric cars may experience faster initial depreciation, their long-term prospects are promising.
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