Conventional wisdom seems to be that at best electric cars will depreciate at the same rate as ICEs or at worst their values will fall off a cliff, the reality is very different, at least in the short run * obviously this will change as production of newer cars ramps up.
This is good though. The faster the values of EVs decline, while still having hundreds of thousands of miles of service life ahead of them, the faster they're affordable on the used car market (choking out ICE vehicles) to those of less means.
electric cars depreciate ridiculously fast right now. I can buy a couple year old leaf with really low miles for $5000 right now in seattle, and i have tons of choices. Even the up-range models from the past years are under 10k. This also applies to up-market stuff like the I3, etc.
We haven't seen how this will hit say, stuff like the bolt, but basically everyone but tesla got hit was outrageous depreciation.
If that keeps up, electric cars could become a similar price choice for a lot of people who don't need to drive all that far, even if they're the earlier low-range models. This could be further incentivized by stuff like free HOV access and free charging some places a lot of locations enjoy.
> The average car depreciation will hit hardest in the first year of ownership. Generally, the drop will be around 15-35% in the first 12 months. And that will continue to rise up to 50% or more over three years.
Year 1: 15-35% depreciation. 65-85% of the original value.
Year 3: 40-60% depreciation. 40-65% of the original value.
Year 5: 60-70% depreciation. 30-40% of the original value.
Year 8-10: 80% depreciation. 20% of the original value.
Oh no, standard depreciation within the expected range! How will we cope?
> Research from Auto Trader said there were “unsustainable levels of depreciation” in the electric car market, with used prices of battery-powered vehicles dropping by 23pc in the last year alone.
Is this because some of them are new models, and the average age is increasing? One article like this made mention of the Model X as one of the highest depreciation. It’s basically no longer sold in the UK (you can get one but the steering wheel is on the wrong side) so therefore the only cars on the market are getting older with no new ones to keep the price up.
> Campaigners have said motorists will continue to find electric cars too expensive without government subsidies, which ended in 2022, or other incentives such as cuts to VAT.
EVs are getting so much cheaper so fast that they'll overtake ICE and hybrid sales soon... but vehicle stock in the US turns over slowly
I've seen predictions that at some point it'll be cheaper to get a new EV than to even keep gasoline in an old ICE car, and once we hit that point it'll flip quickly. 7 years feels tight for that, but not impossible
It'll be interesting to see what the used car market for EVs looks like once they age out where the battery packs start degrading. Not sure they'll have the same long-term value that quality ICEs do today.
The valuation makes sense. In the coming years the auto market is going to be moving rapidly to ev's and away from ice's. Demand for ev's is going to outrun supply, in part due to battery shortages.
Tesla is expanding rapidly and is going to be in a better position than any other car maker to take advantage of the situation, though lately VW has also getting very serious about ev's.
several battery breakthroughs that will dump the cost way bellow the holy grail of car batteries of $100/kwh that makes them on pair with ICE cars. Some estimates predict that they will go way bellow $80 in 2021-22, Means end of 2022 beginning of 2023 will be flooded with even cheaper comparing to Model 3 cars with better quality batteries. Good quality $25-30k electric car will be a new reality. Those segments attack bestsellers like Toyota Camry etc... I'm pretty sure the price war will push them even lower within 1-2 years. Means full line of EV's from very cheap to luxury by 2024-25 on a scale from multiple companies.
As a result we will have cars on the market that cost the same, perform better, and cheaper in a lifetime from service and fuel perspective.
Millennials and GenZ also very eco-friendly, which means younger people are eager to buy EV's.
The only delay could be new battery terra-factories rollout lag. That might give an extra 1-3 years lifetime for ICE.
After that the traditional car market will be shaking as never before.
I've done multiple 10+ hour roadtrips (multiple tanks of gas/multiple full battery charges) with my EV and I'm happy with it's performance. I'm not really sure what else one could ask.
As for depreciation, I'm not one who really buys new cars very often. The vehicle I replaced was was over a decade old and it's resale value isn't that much higher than it's scrap value.
And for people who _do_ go through vehicles more often than I do, I think it's a bit too early to tell. I'm personally skeptical that the lifetime fuel savings for most people won't cover the difference in depreciation. But I guess we'll see!
Battery prices are falling 10-15% a year. Add economies of sale for other parts of an electric car and competition as new electric cars keep coming out in 2 years the difference will be less than 8k when the op plans to buy. My prediction is in less than 5 years electric car sticker prices will be cheaper than petrol cars with the bans on new ice cars coming in the few years after that new model ice cars might actually stop coming out as car manufacturers would not want to spend money on what they wont be allowed to sell.
There's a big generational tech advantage, so we're seeing big depreciation on older EVS. I expect that trend to continue for at least a few more years. The 2017 Chevy Bolt for example will end up probably costing less than $10k here in two more years. That's pretty cheap.
You also have to keep in mind that the economies of scale for EVS are just ramping up. They're more expensive now brand new but it won't be long at all before they're priced competitively against gas cars at the dealer.
Also, a carbon tax will happen sooner or later. That will push people from all income levels towards electric vehicles.
I'm also thinking about depreciation. I suspect most people that want an electric car are going to buy new, especially considering the tax credits. Are they going to be able to successfully offload 3-year old, high-mileage rental electric cars?
I just watched Youtube video saying electric cars have much higher depreciation than non electric cars. It would be a big mistake to think they are cheaper than non-electric cars.
The key thing to remember is that EV's are going to keep getting cheaper due to decreases in the battery costs, while ICE's are going to stay the same. From what I have read, the experts think that around 2022-25 EV's are going to equal ICE's for purchase price, and at that point the whole market is going to tip. The only thing slowing down EV sales will be how fast the auto manufacturers can switch over what they produce.
I know most people don’t believe this, but it is likely that electric cars have a good chance of becoming far cheaper than ICE cars over the coming 5-10 years.
EVs are complex, but in ways that are much more subject to economies of scale.
For example, much of their value is in the software, which replicates for nearly zero marginal cost. Electric motor assembly is highly automatable and a fraction of the cost of assembling engines. There are no emission control systems, fuel systems, exhaust systems.
That leaves battery materials and construction, and these are dropping fast. Goldman Sachs just predicted pack-level prices will be below $100 KWh by 2025 and continue dropping by 11% per year throughout the decade.
In fact, BYD already sells a perfectly-reasonable EV in China for around $11,000 US equivalent.
There will, of course, always be premium priced EVs in the market, but I believe the lower bound of the market will be much lower than the Corollas, Tercels and Honda Fits of today.
Sure but costs are rapidly dropping for EVs while house prices continue to climb.
I think we're going to see some really interesting things over the next 5-7 years as initial prices come down and operating costs stay low. It's going to squeeze the ICE market from both ends which could put them in a really tough position.
I'm reminded of the HDTV market about ~10 years ago when it seems that prices were astronomical. Now you can get a 4k TV for under $300.
I don't entirely buy the author's depreciation argument, since that assumes you're trading in your car every 5 years as opposed to driving it for 15-20+ years until it ready to literally fall apart.
But even still, when you consider significantly reduced maintenance and fuel costs, it's not that far off.
I disagree, your example is just what everyone is experiencing right now.
Nearly all newish used cars are selling for what people paid for them new. The current market does not represent a reasonable market value.
I can assure you EVs of today will depreciate faster than ICE vehicles, as new improvements are made to the tech. So much more money is being poured into batteries and R&D.
for now, EV makers have amazing margins, because they're competing against expensive ICE cars. once they're competing against each other, it'll change pretty fast
* https://fullycharged.show/blog/surprisingly-positive-news-on...
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