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As the world embraces the move to sustainable transportation, electric vehicles (EVs) are becoming the norm. EVs are known for being efficient and eco-friendly, but what about the devaluation of electric cars, and how does this compare to normal internal combustion engine (ICE) cars?
A car’s decline in value due to depreciation can have a huge effect on resell value, which is important to those planning on moving up from one car to another in the future. To help buyers make an informed decision, we need to understand how an EV fares in this regard.
One reason for a car’s value being diminished is due to an accident; the diminished value claim by Mighty could help with recover of some of the value that was lost. Mighty has a guide to help you file these claims yourself, saving you both time and money and protecting your investment.
Depreciation is the loss of a car’s value over time because it is old, has been driven a lot, or is worn out, or because current market trends mean that cars are not worth as much. Depreciation in an electric car can also be determined by other factors, such as battery technology developments, changes in government incentives, and changes in how the public views electric vehicles.
On a 12-month depreciation basis, on average EVs will fall 15-20% in value, and it’s even steeper for regular cars (on average, as with all asset depreciation, it varies). However, some EVs have a reputation for depreciating more quickly than petrol vehicles, but that difference is beginning to close as the market matures.
Several key factors affect the rate of depreciation for electric vehicles:
Electric vehicles feature battery technology which changes at lightning speed, so you may find that your old EV with a shorter range or slower charging is less desirable with time, while the trade value will depreciate faster. Newer models with better performance and greater range are often attractive to buyers.
There are incentives available in many countries (tax credits or rebates) for those who purchase new EVs. While these incentives reduce the initial cost of a new electric car, they can also, indirectly, lower the resale value of older vehicles, as the new EVs are made so affordable.
Demand for EVs in the used car market will have a lot of effects on the depreciation rates of the EVs. Awareness of EV benefits is growing, but some still procrastinate about buying an EV, nervous about charging infrastructure battery replacement costs or long-term reliability.
Some of these brands, like Tesla, retain value much better because of their strong brand reputation and prompt software and performance updates. Brands that might not be known, or older EVs, may experience faster depreciation.
Historically, electric cars have been known to depreciate faster than traditional vehicles, but that is changing. Several factors are contributing to this shift:
EVs have moved on a great deal since the early days, with today’s cars boasting better battery ranges and durability, and they are now more appealing in the used car market. Furthermore, buyers are given assurance with warranties for batteries (often 8-10 years).
EV adoption is accelerating, and so is the resale market for these cars. The increased demand is stabilising depreciation rates.
More people worrying about the environment are beginning to see the value of EVs, further adding to their resale value.
Not all EVs depreciate alike; some models hold their value better than others. For example:
Tesla Model 3: Tesla’s strong brand reputation and generally high-end features make it one of the best EVs for holding its value.
Nissan Leaf: With its newer models now offering longer ranges, it remains one of the most affordable EVs, and its value retention looks good.
If you’re involved in an electric vehicle accident, that may reduce the resale price; also known as the concept of diminished value. This can be particularly troublesome for EV owners, who already buy electric vehicles at rather high prices.
Mighty’s diminished value claim helps EV owners regain some of what they lost. With Mighty’s comprehensive guide to filing these claims without a lawyer, you can protect your investment and receive fair compensation for your losses at a cost that suits you.
If you’re considering purchasing an EV, there are steps you can take to minimise its depreciation:
Choose high-profile, established names in the EV business like Tesla or Hyundai.
Taking care of your battery properly – don’t subject it to excessive, frequent deep discharges and don’t charge it too quickly – will lengthen the lifespan of your battery and improve resale value.
Maintenance and service records, timely repairs, and constant maintenance will ensure the car’s value remains constant.
Know how government incentives might affect the resale market and choose to buy at an appropriate time.
Electric car devaluation is a complicated thing, depending on a number of factors: technological advancement, specifically, and market demand, generally. However, EVs have tended to lose value faster than legacy vehicles in the past. Still, rapidly increasing adoption rates, improved technology, and greater awareness of environmental issues are slowly closing the gap.
The predicted strong resale value of electric vehicles is bearing out as popular models such as the Tesla Model 3 show lasting power in the used car market.
If you’re an EV owner and are worried that your car’s value will plummet after an accident, filing a diminished value claim with Mighty can get you at least some of your losses back. It won’t cost a thing to become acquainted with Mighty’s valuable resources that walk you through the process of protecting your investment on your own (neither legally nor financially).
The market promises more value retention for electric vehicles, and based on the fact that they are here to stay, they make an increasingly smarter investment for savvy environmentally conscious buyers.
