Tesla Model S tops value depreciation chart for electric vehicles
What's the story
A study by a US-based research website iSeeCars.com has found that electric vehicles experience the highest depreciation rates.
Tesla Model S leads the pack in terms of five-year depreciation among EVs.
According to the study, all-electric cars lose 49.1% of their value within five years, while trucks and hybrids fare better, losing only 35% and 37% of their value, respectively.
However, the depreciation rate for EVs has improved by 18% since 2019, as they previously lost an average of 67.1%.
Factors
Factors affecting depreciation rates of EVs in the US
The notable gap in depreciation rates between EVs and hybrids can be partially attributed to federal tax credits in the US, available for electric vehicles.
Karl Brauer, an iSeeCars executive analyst, states, "Between incentives that effectively lower an EV's price before it's even purchased and concerns about battery replacement costs, used electric vehicles have always suffered higher depreciation than equivalent gasoline cars."
Brauer further predicts that this trend will persist until EVs no longer need substantial incentives to sell.
Implications
Implications for used EV buyers and new EV owners
The steep depreciation rates for electric vehicles offer potential buyers enticing deals on pre-owned EVs.
However, those considering a new electric vehicle should be aware that it may lose a significant portion of its value over the next five years.
Nevertheless, this factor should not discourage prospective buyers from acquiring their preferred model.
The study underscores the importance of being familiar with depreciation rates when evaluating both new and used electric vehicle purchases.