Details of the study

The study analysed six popular aftermarket EV models in the US and UK, focusing on vehicles that were 12 months old and had covered around 10,000 miles.

The results were shocking:

• Audi e-Tron GT loses out on price in UK at around $138,000 49% of the cost in the first year of operation.
• Ford Mustang Mach-E and Polestar 2 produced by Chinese company Geely in cooperation with Volvo in the same period Price dropped by 52%.
• Tesla’s Model 3 performs slightly better in its first year on the UK market Depreciated at 45%and researchers attribute this trend in part to Tesla’s frequent software updates that improve the car’s performance and features.
• But even premium brands were not immune, with the Porsche Taycan and Hyundai Ioniq 5 also losing almost half their value in the first year. The decrease was 49% and 50% respectively..

Why is this happening?

Interestingly, in the UK, increased mileage does not have a significant impact on the residual value of electric vehicles.

For example, the doubling of the Polestar 2 mileage from 16,000 kilometers to 32,000 kilometers, only 2% reduction in costThe Porsche Taycan has shown similar consistency. At most, the car’s age has minimally affected its price after the first 12 months of use.

This rapid depreciation in the first year stands in stark contrast to the performance of internal combustion engine vehicles, which retain much of their value over time.

In the UK, similar petrol-powered cars are often more than 40% more expensive than equivalent electric models in the aftermarket.

The situation in the USA

Although the depreciation rate for electric cars in the US is not as high as in the UK, it is still significant and often exceeds 40% in the first year. The average annual mileage in the US is also higher at 22,400 kilometres (14,000 miles) compared to 11,200 kilometres (7,000 miles) in the UK.

According to American automotive research company iSeeCars, electric cars in the US lose an average of 49.1% of their value over five years, compared to 38.8% for gasoline-powered vehicles.

Vehicle shortages caused by the pandemic are keeping aftermarket prices high, but the average price of a used electric car in the U.S. has fallen to $28,800, compared with $31,400 for a gasoline-powered car.

Electric car market

The study also highlighted the challenges faced by EV buyers in the low-cost segment. In the UK, used electric cars such as the Renault Zoe and Citroën e-C4 can be purchased for as little as $6,400 and $15,000 respectively. However, concerns remain about the cost of replacing traction batteries, with only 2.5% of UK owners facing this need, with replacement costs ranging from $6,500 to $20,000.

High-end EV buyers are particularly vulnerable to rapid depreciation. For example, a Mercedes-Benz EQE lost $51,000 in value in just three months of ownership, equivalent to a daily depreciation of $615 even when not in use.

What’s the problem

Wired’s investigation attributes the steep depreciation to a variety of factors, including automakers’ aftermarket price cuts, which have pushed down prices for new electric vehicles, while the frequent release of new models has accelerated the depreciation of older electric cars.

Despite these challenges, electric vehicles continue to gain market share and will account for 18.5% of new car sales in the UK by the end of July 2024. In the US, electric vehicles make up 6.8% of the market, well ahead of plug-in hybrids.

According to research, electric vehicles tend to lose most of their value in the first 12 months, after which their prices stabilize, suggesting that long-term ownership or purchasing a lightly used electric car can be a financially rewarding decision.