Do Electric Cars Depreciate Faster? Everything You Need to Know About EV Depreciation

There is no denying that electric cars are the future of transport. The automotive industry experts believe the sale of electric vehicles (EV) will soon outnumber gas and diesel cars – a prediction fuelled by the fact that many major manufacturers have shifted their focus towards environmentally-friendly technology. However, as new electric cars continue to hit the road every day, prospective car owners worldwide are grappling with one important question: Do electric cars depreciate faster?

Considering the latest electric cars with cutting-edge systems and luxurious interiors, it is a fair question that can cost you a pretty penny.

However, it is important to note that although electric vehicles can be rather expensive upfront, they can help you save a significant sum over the years as they don’t require gas or petrol to run.

In addition, the maintenance for electric cars is relatively inexpensive since they don’t have a combustible engine and other components that traditionally require regular repairs.

Fortunately, electric cars have come a long way in the last decade. These show-stopping vehicles promise excellent range on a single full charge, boast an impressive range of configurations, and feature high-tech infotainment systems with countless options.

These vehicles are no less than works of art that transport you from one place to another without emitting harmful gases through their tailpipes.

That being said, it is not surprising for prospective car owners to think about the residual value of their vehicle a few years down the road.

Electric car depreciation
Electric car depreciation

If you are also questioning whether electric vehicles are worth buying and if they depreciate far more than their gas and diesel-powered alternatives, this comprehensive guide will answer all your questions and more.  

What Is Depreciation?

Have you ever wondered why the prices of most second-hand items are generally lower than their brand new versions? The answer is simple: depreciation.

This term is used to explain the decrease in the monetary value of an asset over time. An item can lose its value due to usage, wear, and tear, or obsolescence.

While some assets, such as real estate and precious jewels, appreciate due to their high demand and rarity, among other factors, other assets such as electronic appliances and cars begin to lose a percentage of their original price after only a short time.

When it comes to automobiles, the term “residual value” denotes the percentage of the new price that is lost. In other words, it is an estimated amount that the car owner may earn after selling the said vehicle.

Hence, please note that a low residual value is not a good sign for car owners, as it means their asset has lost a major chunk of its monetary value.

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Do Electric Cars Depreciate Faster?

If you are concerned about electric car depreciation, please know that the answer to your question may not be as straightforward as you think. However, it is not very complicated either.

There is a common assumption that all-electric cars depreciate quicker than their traditional counterparts.

While the statement may stand true for some of the older models or smaller electric cars produced by emerging brands, it does not apply to all EVs primarily because not all-electric cars are the same or cost the same.

For example, if you plan to buy Tesla Model X, your state-of-the-art car will not depreciate any faster than a traditional vehicle within the same price range. In fact, the average time for EV depreciation is on par with petrol and diesel vehicles.

In some instances, electric cars tend to hold a higher residual value than their alternatives.

According to data from industry experts, electric cars can hold around 48.9% of their value after three years or 36,000 miles – the most common duration and mileage used in relation to car depreciation as it is the average time most buyers hold on to their vehicle before selling them. Conversely, regular cars only hold about 40% of their value.

Note: These are average statistics. Some electric cars may depreciate faster than traditional cars and vice versa.

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Electric Car Depreciation in Numbers: Explained

To further address your question, “Do electric cars depreciate faster?” let’s look at some interesting examples to understand this phenomenon better. 

As mentioned above, three years or 36,000 miles are considered the industry average for car depreciation. An average car can lose a benchmark 60% of its value during this period, which leaves owners with a 40% residual value.

Put simply, if you buy a vehicle for $40,000 and drive it approximately 12,000 miles every year, your car is likely to lose 60% of its value, which amounts to a whopping $24,000. So, by the end of the third year, the residual value of your car will drop to $16,000.

When it comes to premium-priced electric cars, these statistics can be rather worrisome. After all, you wouldn’t want your six-figure investment to drop to less than half its prize in as little as three years.

However, you may be glad to know that the estimated residual value of the upmarket Mercedes EQC is around 65.3%, whereas the figure for most Tesla models stands at 58% after three years.

Meanwhile, the popular and comfy Volkswagen e-Golf has the expected residual value of 50%. On the other hand, experts claim the swanky Porsche Taycan would still hold 73% of its value even after the aforementioned period.

Interestingly, much like everything else in life, there are two sides to electric car depreciation.

While it may not be a good thing for car owners, it is certainly a great thing for those looking to buy a used car.

On average, cars shed a major chunk on their value after three years. That means its residual value would not decrease as quickly from that point onwards.

So, if you are looking to play your part in protecting the planet from further destruction by reducing your greenhouse gas emission, switching to an electric car could be an ideal option.

These vehicles are relatively eco-friendly, require minimal maintenance, operate without fuel, and most importantly, are likely to hold their value better than most traditional cars available in the market.

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What Factors Contribute To Electric Car Depreciation?

Several factors contribute to EV depreciation. However, let’s look at the three main reasons electric cars (and combustible-engine cars, for that matter) lose their value.

EV depreciation
Photo of a high-speed electric car driving on the road


Except for a few rare and vintage cars that may fetch a high price among collectors, all vehicles tend to lose their value as they become old. The depreciation is usually rather high in the first three years before slowing down significantly.

Wondering why the age of an electric car affects its monetary value? Automobile manufacturers release new models of their popular vehicles every year, thus making older versions less valuable.

Moreover, the latest electric cars are fitted with better technology and are far more lavish, which automatically decreases the value of older models with relatively less tech and extravagance.


Another factor that contributes to electric car depreciation is mileage. A car that has covered more miles is usually considered less valuable than the one with lower mileage.

Therefore, those planning to sell their car after a short period can consider limiting the miles on their vehicle to get a higher price, hopefully.

Mileage directly impacts the residual value because cars covered great distances generally need more maintenance and repairs than their low-mileage alternatives.

Other factors that cause electric cars to depreciate include scratches and dents on the exterior body, dirty interior, and damaged wheels. However, you can take care of these problems with regular servicing.

What Has Changed In Terms of EV Depreciation?

It is no secret that the latest electric cars are more advanced than the earlier models that traversed the roads some ten years ago.

Nonetheless, despite its explosive popularity, the EV industry is relatively new, making electric cars a niche product. This is the primary reason the older models failed to hold their value in the market.

Today, many electric cars are more sought-after among prospective buyers than their petrol or diesel equivalents. The sleek designs, sophisticated interiors, high-tech infotainment systems, AI-assisted navigation, and other alluring features of EVs have improved their residual value by leaps and bounds.

Furthermore, low-emission zones and changing attitudes towards climate crisis paired with government incentives have allowed electric cars to hold on to their monetary value.

However, since these factors are beyond your control as a buyer, there is no need to worry too much about them.

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Do Electric Car Batteries Depreciate?

Most of the latest electric cars feature a lithium-ion battery pack, which is made of a large amount of smaller batteries that are almost identical to the ones you may find in your smartphone or laptop.

If you have been using the same phone or computer for a couple of years, you may have noticed that your device does not hold as much charge as it previously used to.

As a result, you probably have to charge them more often than before. This happens because the batteries degrade over time – a statement that stands true for electric car batteries as well.

However, don’t let this little fact put you off because lithium-ion batteries used in electric cars don’t show signs of degradation for decades.

In other words, they don’t depreciate as quickly as you may think they do. So, fret not; you can still drive hundreds of thousands of miles in your EV before needing a new battery pack.

On the other hand, petrol and diesel-powered cars feature a combustible engine that requires routine maintenance and depreciates rather quickly.

Pro Tip: If you want your electric car battery to last for years to come, avoid charging your vehicle overnight. Moreover, most experts recommend against storing your call at full charge for prolonged periods. Even if you have another car that you drive to work, please make sure to use your electric vehicle every now and then to ensure it remains perfectly fine.

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Which Electric Cars Are Likely to Hold Their Value?

The question “do electric cars depreciate faster?” is usually followed by “which electric cars hold their value for longer?”

Which electric can hold their value
Close-up photo of a Tesla car

While depreciation may vary depending on the usage and condition of a vehicle, the current trends indicate that EVs produced by leading brands such as Tesla and Porsche is not likely to depreciate as quickly as most other traditional cars at a similar price range.

If you are anxious about electric car depreciation, here are a few EVs you must consider checking out.

Tesla Model 3

Designed for safety and excellence, Tesla Model 3 is one of the most popular fast-back four-door cars introduced by the world-renowned manufacturer. It has a sturdy structure, accident protection features, and a very low risk of rollover.

Moreover, its dual-motor technology promises high-speed acceleration. It also has 12 ultrasonic sensors and 360-degree cameras for maximum visibility, among other features. 

Tesla Model X

The high-performing Tesla Model X is also not likely to depreciate as quickly as its alternatives. This electric SUV boasts an updated battery architecture that enhances its speed and efficiency alike.

The vehicle also features spacious cabins, falcon-wing doors, tri-zone temperature controls, 17-inch cinematic display, and other brilliant features. Tesla Model X is available in 5-, 6-, and 7-seat configurations.

Porsche Taycan

Owning the avant-garde (and premium-priced) Porsche Taycan is probably every car enthusiast’s wildest dream. It has a spellbinding exterior body, high-speed acceleration, good driving range, and a tech-laden environment.

The advanced features of this electric sports car include adaptive cruise control, remote-controlled parking, and night vision. Furthermore, all of the Porsche Taycan models have high residual values.

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On a Final Note

To conclude, electric cars tend to depreciate at the same rate as petrol and diesel-fuelled vehicles. However, since there are always some exceptions, experts have found that big-brand EVs hold their value more strongly than traditional equivalents.

Meanwhile, older and smaller electric cars with outdated features have low residual value. We hope our guide on “Do electric cars depreciate faster?” has answered all of your questions regarding the topic and will help you make a well-informed decision for your next purchase.