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Polestar 2 2024

EV depreciation: A helpful guide for buyers

When purchasing a vehicle, a key consideration for many buyers is the rate of depreciation. If you’re interested in buying a car that will hold its value in the longer term, you should consider opting for an electric vehicle (EV).

Unlike their combustion engine counterparts, used EVs often experience slower rates of deprecation. This can be attributed to several factors, such as higher market demand, lower running costs, and exemptions from road tax (VED).

Although EVs are often priced higher than traditionally fuelled cars, buying one could help your money go further, as when the time comes to sell your car, you should have more cash to put towards your next purchase. (You can find out how much your EV is currently worth using webuyanycar’s free car valuation tool.)

In this guide, we will define depreciation in the context of used cars. We’ll also examine why EVs typically retain more value than combustion models – and highlight some of the key depreciation factor for EVs. Finally, we’ll list five EVs that are known for retaining more value than their rivals.

What is depreciation?

Depreciation, in the context of used cars, refers to the decline in a vehicle’s value over time. This is influenced by various factors, including:

  • Age
  • Mileage
  • Overall condition
  • Market demand

Cars are among the biggest purchases most of us will make. Therefore, understanding how depreciation works can help you to protect your investment.

EVs vs combustion engine cars: Which depreciate faster?

Traditional combustion engine vehicles tend to depreciate faster than equivalent electric models. This is largely due to increased demand for environmentally friendly transport.

Additionally, advancements in EV technology (such as improved range and reliability) and growing public awareness about these benefits have also contributed to their slower depreciation rates.

What are the main depreciation factors for EVs?

Several factors influence the rate at which EVs depreciate. These include:

  • Battery health: The condition and lifespan of an EV’s battery will significantly influence its value retention rate.
  • Technological advancements: As EV technology evolves, older EVs may depreciate faster if they lack the latest features.
  • Market trends: The rising popularity and demand for EVs can positively impact their resale value.
  • Government incentives: Policies that favour EVs, such as exemption from road tax and congestion charges make them more desirable. This drives up demand and ultimately increases value retention.
  • Running costs: EVs are relatively cheap to run compared to petrol and diesel cars. This often makes them more attractive to buyers and helps them maintain value.

By understanding these factors, car buyers can make more informed decisions when considering an electric vehicle purchase.

Which EVs hold their value?

Hyundai Ioniq

This practical family EV loses just 48% of its brand-new value at the three-year mark.

BMW i3

The BMW i3 loses a little over half its value after three years. However, given the high cost of new electric BMWs, purchasing a used model could be a smart option for many readers.

Tesla Model 3

Tesla’s popular Model 3 offers affordable tech and performance, together with excellent value retention. After three years, you can expect your Model 3 to lose a little over 40% of its brand-new value.

Polestar 2

The Polestar 2 is an all-electric hatchback offering a range of more than 400 miles. This model typically loses just 42% of its brand-new value after three years.

Volkswagen e-Golf

Finally, the e-Golf also fares well in the value retention stakes, losing just 49% of its value after three years. This model is constantly in demand among second-hand buyers, thanks to its affordability and family-friendly practicality.