This article aims to dismantle a widely accepted myth: that electric vehicles (EVs) inevitably depreciate and lose significant value upon resale. This notion has gained traction not due to meticulous analysis, but rather because many people focus solely on a single data point: the second-hand price of a car one year after purchase. If one extends the timeframe, however, the entire narrative shifts dramatically.
To clarify the facts, EVs do indeed experience higher depreciation in their first year compared to gasoline or diesel vehicles, a reality that cannot be denied. However, this is not because electric cars suddenly become outdated; rather, it is due to their higher initial price tags. Factors such as battery costs, premiums during the transition period, and manufacturers’ efforts to recoup early investments contribute to many EVs being priced above their internal combustion engine counterparts. Consequently, when these vehicles enter the second-hand market, their prices naturally adjust downward, leading to a pronounced depreciation in the first year.
Yet, if one only considers the sticker price, the critical factors are overlooked. Governments and manufacturers have provided numerous incentives in recent years to promote electrification, including cash subsidies, tax reductions, free home charger installations, and common three-year interest-free financing options. When these incentives are factored in, the actual acquisition cost of a new EV often diverges significantly from its listed price. The first-year depreciation, to some extent, merely reflects these benefits all at once.
Looking beyond the first year, the situation normalizes significantly. Market data, including that from Motorpoint, indicates that after the first year, the depreciation rates of EVs are actually quite comparable to those of internal combustion engine vehicles. In other words, EVs do not continue to depreciate at an accelerated rate; rather, they experience a sharp adjustment initially, after which the depreciation returns to a more typical pace. The notion that they ‘do not hold their value’ is largely an illusion created by a mismatch in timing.
If one truly wishes to avoid the first-year depreciation, there are two rational options. The first is to purchase a one- or two-year-old electric vehicle. The most significant depreciation has already been absorbed by the first owner, while the vehicle’s condition and technology remain relatively new. More importantly, the battery typically still retains six to seven years of original warranty, making the actual risk far lower than commonly perceived. This age range often represents the best value for money.
The second option is to lease an electric vehicle. If you prefer not to deal with depreciation at all, leasing can be the most straightforward solution. With fixed monthly expenses, you simply return the vehicle at the end of the lease, completely detached from fluctuations in second-hand prices. For those not intending to hold a vehicle long-term and who wish to enjoy the latest models and incentives, leasing is, in fact, an underrated option.
Ultimately, depreciation is merely a calculation. The number of years you use the vehicle, how you acquire it, and whether you account for all incentives are the key factors determining whether you ‘lose or gain’ value. To summarize a rapidly changing market with the phrase ‘electric vehicles do not hold their value’ is an oversimplification. The real question is not whether depreciation occurs quickly, but whether you have chosen the most suitable entry method for yourself.
