Electric Car Depreciation Rates

Prices plummeting for used electric cars values

 

We at Easy Gap Insurance have paid a particular interest in the electric car market over the past number of months, however, what we haven’t yet discussed is the depreciation rates on the models. Early ‘adoptors’ of the electric vehicle (EV) craze are facing heavy depreciation of the vehicles value, despite government incentives. The latest data from CAP Automotive shows that, over the past three years, all-electric vehicles have retained only 20.2% of their value.

There is some good news in that CAP is forecasting an improvement to 26 % retained value for RVs over the next three years/30,000 miles, but that’s still way behind diesel cars which on average have retained 44.7% of their value. Hybrids have retained 45.3% over the past three years.

 

With other manufacturers being added to the electric car market such as BMW and Mercedes and other manufacturers such as Hyundai and Kia pondering the decision, it is not yet known how the depreciation of models will be effected by the addition of such models.

 

The Hyundai brand has taken a serious interest in the electric car market and with sales in the market almost doubling last time out, the brand are sure to develop a rival for the Nissan Leaf sooner rather than later.

 

Electric Vehicle depreciation.

The Renault Fluence Z.E electric car sells new for £18,745 and when you take the Government grant of £5,000 into account, you can buy a 2012 12-reg model with 5,371 miles for £8,000. A total depreciation of 57%. The Nissan Leaf at £25,990 new became £14,299 for a 2012 12-reg model, losing 45% in a year.

 

Paul Fraser-Bennison bought an electric Renault Twizy for £7,200. When he wanted to exchange it after less than a year, he was offered only £2,500. Making it’s drop in value around 62% in less than twelve months. Eventually, he settled for selling it at £3,500, a loss of 48% of it’s price when new. Worryingly enough is that the prices quoted to Mr Bennison were from a Renault dealer.

 

Comments on the Electric Car price change.

Mark Norman from CAP Consulting has done a lot of work on electric vehicles. He says: “The price is what is killing them at the moment. Even after the £5,000 subsidy they’re too expensive and people still have questions about them. When the prices start to come down, they will become more popular, early adopters will become advocates, depreciation will slow and the market will stabilise.”

 

CAP’s research on Electric Car depreciation.

CAP’s research shows that the actual amount of depreciation as a sum is almost the same in Germany as it is in the UK. However, in Germany there is no electric vehicle price subsidy: with a higher starting price, the rate of depreciation is significantly lower. So subsidies do nothing to help cars maintain their value. And with only 2,538 EVs going to new UK homes so far this year ,0.14% all new cars sold, they do little for sales.

 

DEPRECIATION BY FUEL TYPE

Fuel type/average retained value after three years

Petrol/electric hybrid 45.3%

Diesel 44.7%

Petrol 43.6%

Electric 20.2%

 

DEPRECIATION BY SECTOR

Sector/average retained value after three years (average depreciation)

1. Supercar 53.5% (-£74,081)

2. SUV 53.0% (-£14,367)

3. Luxury executive 52.8% (-£103,980)

4. Sports 49.8% (-£27,342)

5. Convertible 47.2% (-£16,844)

6. Executive 45.6% (-£19,406)

7. City car 44.4% (-£5,973)

8. Supermini 44.3% (-£8,336)

9. Lower medium 42.3% (-£11,455)

10. Upper medium 41.9% (-£15,163)

11. Large executive 40.1% (-£39,797)

12. MPV 39.7% (-£11,994)

13. Coupé Cabriolet 39.3% (-£18,516)

14. Electric 20.2% (-£21,290)

 

The Electric Car depreciation upside

 

On the upside of the depreciation, customers could buy a used electric car for a lower price rather than opt for the pricey new version. A year old Nissan Leaf will have cost £25,990 new, or £7,000 more than a similarly sized diesel Ford Focus at £18,700. After 12 months, CAP Automotive says the Focus will be worth about 63% of its new price while the Leaf will be worth about 53%. This will have helped the EV’s premium shrink from £7,000 to £2,000. Buyers will probably get that back in the first couple of years courtesy of not having to buy diesel.

 

The drop in price of the used electric vehicles is because they are still relatively new in the market. Dealers themselves do not know the prices they should be charging customers. They take a risk buying the used EV and probably don’t know when, or even if, a customer will come along to buy it. No doubt, later on the market will stabilize as the used market for an Electric Vehicle becomes defined and hopefully depreciation will slow to ta similar value as with other vehicles.

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