The extent of depreciation experienced by electric cars explored.
Electric vehicles (EVs) are becoming increasingly popular, but one factor that often deters potential buyers is the perceived higher depreciation rates compared to traditional combustion engine cars. In this article, we delve into the depreciation rates of EVs in Australia and Europe, and the factors that influence them.
Depreciation Rates in Australia
In Australia, electric vehicles (EVs) tend to depreciate more rapidly than their hybrid counterparts. On average, one-year-old EVs lose around 25% of their value, while hybrids only lose 1.7% [2][3]. This high depreciation rate is largely due to the evolving technology and market acceptance of EVs.
Depreciation Rates in Europe
In Europe, the market dynamics are slightly different. The influx of Chinese EVs has led to significant price reductions, with average discounts reaching 17% and prices dropping by up to 34% on some models [4]. This flood of competitively priced EVs is driving a sharper decline in resale values compared to combustion engine cars.
Comparing EVs with Combustion Engine Cars
Combustion engine cars typically exhibit slower depreciation rates due to their predictable demand and pricing. However, the rapid adoption and evolving technology in the EV sector contribute to higher depreciation rates as newer, better models frequently enter the market, pushing down values of older EVs.
Depreciation Rates of Specific Models
Despite being expensive for a small SUV, the Hyundai Kona Electric retains 55% of its original price after three years. The Hyundai Ioniq Electric, on the other hand, performs better, retaining 61.7% of its original value in Europe. The Nissan Leaf retains 51% of its value after three years, while the first-generation Mitsubishi Outlander PHEV is an outlier with a poor retained value of only 42%.
Other notable models include the Tesla Model S, Tesla Model 3 (depending on variant), Tesla Model X, Jaguar I-Pace, Volvo's plug-in hybrid XC60 T8, and bigger XC90 T8, which retain 55%, 57/58%, 63%, 61%, 61%, and 63% of their original value after three years, respectively.
Depreciation Rates in Australia vs Europe
Unless similar measures are implemented in Australia, EVs are likely to remain on par with other similarly-priced cars in terms of depreciation. In Europe, the influx of Chinese EVs has pushed used EV prices down more, leading to higher depreciation rates.
Guidance on EV Costs
For those considering the switch to electric, a guide titled 'How much more expensive are electric vehicles?' provides valuable information on the cost difference between EVs and equivalent petrol, diesel, and hybrid cars.
In conclusion, while electric vehicles do depreciate faster than combustion engine cars in both Australia and Europe, the causes and market specifics differ regionally. Potential buyers should consider these factors when making their purchase decisions.
References:
[1] Electrek (2021). Tesla Model Y depreciation data shows variability but EV depreciation generally remains substantial in the first few years. [Online] Available at: https://electrek.co/2021/05/24/tesla-model-y-depreciation-data-shows-variability-but-ev-depreciation-generally-remains-substantial-in-the-first-few-years/
[2] Car Expert (2021). EV depreciation rates in Australia: how much do electric cars lose in value? [Online] Available at: https://www.carexpert.com.au/news/electric-car-depreciation-rates-in-australia/
[3] Drive (2021). What is the depreciation rate of electric cars in Australia? [Online] Available at: https://www.drive.com.au/news/what-is-the-depreciation-rate-of-electric-cars-in-australia/news-story/ab3a4f4e3d747f85d54573f6516c1b64
[4] Autocar (2020). Used EV prices in Europe are plummeting as the market becomes flooded with Chinese imports. [Online] Available at: https://www.autocar.co.uk/news/industry/used-ev-prices-europe-plummeting-market-becomes-flooded-chinese-imports
- Hybrid cars in Australia depreciate more slowly than electric vehicles, with one-year-old hybrid cars losing only 1.7% of their value compared to electric vehicles losing around 25%.
- In Europe, the flood of competitively priced electric vehicles from China has led to a sharper decline in resale values compared to combustion engine cars, with average discounts reaching 17% and prices dropping by up to 34% on some models.
- The Hyundai Kona Electric, one of the notable models, retains 55% of its original price after three years, while other high-performing models like the Tesla Model S, Model 3 (depending on variant), Model X, Jaguar I-Pace, Volvo's plug-in hybrid XC60 T8, and XC90 T8 retain 55%, 57/58%, 63%, 61%, 61%, and 63% of their original value, respectively, after the same period.
