If you’re considering an electric vehicle (EV) but worried about its resale value, recent findings bring good news.
Although older models of electric vehicles depreciated faster than their gas-powered counterparts, new research indicates that the latest EVs with longer driving ranges are holding their value much better, aligning closely with the resale rates of many traditional gas vehicles.
This study, which analyzed over nine million car listings across more than 60,000 dealerships from 2016 to 2022, shows that the depreciation rate for older battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) with limited range was quicker compared to conventional and hybrid cars.
Tesla was noted as an exception, with its older models retaining value more effectively.
However, the landscape is shifting. Newer electric vehicles that boast higher driving ranges are showing improved value retention compared to earlier, shorter-range models.
The research, published in the journal Environmental Research Letters, also highlighted the impact of the COVID-19 pandemic on car prices.
From January 2020 to March 2022, the average listing prices for both gasoline cars and electric vehicles surged by 37% and 39% respectively, when adjusted for inflation to 2019 dollars.
John Paul Helveston, Assistant Professor of Engineering Management and Systems Engineering at George Washington University and the study’s lead researcher, explained the implications of these findings.
“The increasing resale value is a double-edged sword,” said Helveston.
While it’s beneficial for new car buyers who will likely get a better return on their investment in the future, it also signifies the potential end of cheaper, used electric vehicles, which have been crucial for buyers on a budget.
The Inflation Reduction Act’s new $4,000 subsidy for used electric vehicles could help alleviate some financial challenges in the used market, according to Helveston.
This policy aims to make second-hand EVs more accessible to a broader range of buyers, supporting the transition towards cleaner transportation options.
Overall, this shift in resale value trends is encouraging for the electric vehicle market. As newer models demonstrate improved battery life and driving ranges, they are becoming more appealing not just as a new purchase but also as a worthwhile investment in the used car market.
This trend reflects the evolving perception and growing confidence in electric vehicle technology, marking a significant step forward in the automotive industry’s shift towards sustainable practices.
