EV Depreciation: Everything You Need to Know in Today’s Car Market

For electric vehicles, depreciation should be viewed as a cost of ownership, not just a resale problem. Every mile driven contributes to value loss, just like fuel or maintenance costs. When buyers focus only on charging savings or incentives, they often underestimate how much depreciation affects the total price of ownership. Data from the Autovista Group shows that battery-electric vehicles (BEVs) are depreciating more rapidly than internal combustion engine (ICE) cars in several European markets, highlighting the importance of considering up-to-date data when evaluating EV depreciation.

Several factors shape how electric cars depreciate:

• Purchase price of the vehicle

• Mileage recorded on the odometer

• Battery health and battery degradation

• Market supply and demand

• Government incentives and discounts

• Speed of technological improvements

Because EV technology is evolving quickly, depreciation patterns for electric vehicles look very different from those of ICE vehicles powered by internal combustion engines.

Do Electric Cars Depreciate Faster Than Petrol and Diesel Cars?

In most cases, yes. Electric cars generally depreciate faster than petrol and diesel cars, especially during the first few years of ownership.

When depreciation is measured per mile, the difference becomes clear. On average:

• ICE vehicles depreciate at roughly $0.11 to $0.12 per mile

• Electric vehicles depreciate at roughly $0.27 per mile

This means that after around 100,000 miles:

• ICE cars typically lose about 40 percent of their original value

• EVs typically lose about half of their original value

EVs with longer driving ranges tend to retain their value better, as consumers place a premium on vehicles that can travel farther on a single charge. However, on average, EVs lose approximately 55%–70% of their value in the first 5 years, compared to roughly 40%–50% for gas cars.

Higher upfront prices amplify this effect. New electric cars often cost significantly more than comparable petrol models, so the absolute value lost is larger even if the percentage difference seems small.

This does not mean electric vehicles are bad purchases. It means buyers need to understand that depreciation, not fuel, is often the highest cost of EV ownership.

How Fast Electric Vehicles Lose Value

Electric vehicles tend to lose value quickly during their early years, then level off as they age. The first three years are especially important for depreciation. The average used electric car price has dropped from $63,069 to $33,645 since September 2022, representing a 47% loss of value. Vehicles currently for sale reflect these trends, with many listings showing significant discounts compared to their original prices. According to Auto Trader, used electric cars have seen their prices decline by 23% in the last year alone. For example, Auto Trader reported that a motorist buying a £50,000 electric car could expect to lose £24,000 in value over three years, compared to £17,000 for a similarly priced petrol car.

Most electric cars can be expected to lose:

• Around 20 to 30 percent of their value in the first year

• Between 45 and 60 percent after three years

• Roughly 55 to 70 percent after five years

By comparison, many petrol and diesel cars lose closer to 40 to 50 percent over the same five-year period.

Mileage plays a critical role here. EVs with high mileage often see worse resale outcomes because buyers associate mileage directly with battery degradation. Even if the battery is healthy, perception alone can push resale prices lower.

Why EV Depreciation Is Accelerating

Electric vehicles have always depreciated differently from ICE cars, but depreciation pressure has increased in recent years. This is not happening for one single reason. It is the result of multiple market forces acting at the same time.

One major factor is the rapid pace of technological improvement. The EV industry operates on an approximate 18-month technology cycle, causing older models to feel outdated quickly. Newer models arrive with:

• Longer driving range

• Faster charging speeds

• Improved power efficiency

• Better software and features

As a result, older models feel outdated much faster than traditional cars. This is especially true for early-generation EVs with limited range.

Another key factor is battery economics. Batteries account for a significant portion of an EV’s production cost, often around 40 percent, and this heavily influences resale values. A projected 50% drop in battery prices by 2026 allows manufacturers to lower the sticker prices of new models, further depressing used EV values. As battery prices fall, manufacturers can lower the price of new EVs. While this is good for new buyers, it puts downward pressure on used EV values.

Other forces accelerating depreciation include:

• Increased production volumes from manufacturers

• The introduction of more affordable EV models from China has also contributed to the downward pressure on the resale values of used EVs.

• Lower prices on new EVs due to incentives and discounts

• Rising supply of lease returns entering the secondhand market

Manufacturers and sellers attempt to lead in price reductions or market share to stay competitive, which further impacts EV depreciation.

Together, these forces push resale prices down faster than many buyers expect.

The Role of Battery Health and Battery Degradation

Battery health is one of the most important factors influencing EV depreciation. Unlike ICE vehicles, where engine wear is gradual and familiar, EV buyers focus heavily on battery condition.

All electric vehicle batteries degrade over time. This means they slowly lose their ability to store energy, which reduces driving range. While modern batteries are designed to last a long time, concerns about degradation still affect resale value.

Key points buyers consider include:

• Remaining battery capacity

• Charging history and fast charging use

• Warranty coverage

• Replacement cost

Companies like Recurrent provide battery health data, helping both buyers and sellers assess battery condition. These companies play a key role in influencing resale value and boosting buyer confidence by making battery health more transparent.

Battery replacement can cost anywhere from $5,600 to $20,000 depending on the model. Even if replacement is unlikely, the perceived risk alone lowers resale price, especially for older models that are out of warranty.

Most manufacturers provide battery warranties of around eight years or 100,000 to 125,000 miles. Vehicles approaching the end of this warranty period often depreciate faster as buyers factor in future costs.

EVs vs ICE Cars in the Current Car Market

When comparing electric vehicles with ICE cars, it is important to separate long-term benefits from short-term value retention.

Petrol and diesel cars still benefit from:

• Stable technology

• Predictable resale patterns

• Strong demand in many regions

• Familiar repair and maintenance networks

However, diesel car sales are declining in many markets, particularly in the UK and Europe, due to emissions rules and public perception. Over time, this could increase depreciation pressure on diesel vehicles as well.

Electric vehicles face different challenges. While demand for EVs is growing, resale values are affected by oversupply and rapid innovation. This is why hybrids often perform better in terms of residual values. They combine electric benefits with familiar petrol systems and lower battery risk.

Popular EVs and Real-World Depreciation Examples

Not all electric cars depreciate at the same rate. Brand reputation, demand, and model popularity matter a lot.

For example:

• Premium EVs often depreciate faster due to higher starting prices

• Lesser-known models or first-generation EVs lose value more quickly

• Popular EVs with strong demand tend to perform better

The Tesla Model 3 retains its value, thanks to a high demand and strong brand recognition.

Tesla is a notable exception in many markets. Models like the Tesla Model 3 and Model Y often retain value better than other electric cars because of:

• Strong brand recognition

• High consumer demand

• A well-established charging ecosystem

In contrast, vehicles like the BMW i4 or Mercedes-Benz EQS experience steeper early depreciation due to higher prices and luxury market dynamics.

Traditional models like the Toyota Corolla provide a useful comparison. While not electric, they demonstrate how stable demand and reputation can protect resale value over time.

What Is Happening in the Used EV Market

The used car market for electric vehicles has changed dramatically. Prices have fallen sharply, but demand is rising.

Several trends define the current secondhand market:

• Used EV prices have dropped by nearly half since 2022 in some regions

• Large volumes of lease returns are increasing supply

• Lower prices are attracting more buyers

• Used EVs often sell faster than petrol cars despite lower resale values

• Used electric cars on Auto Trader's site tend to sell up to five days faster than petrol vehicles, indicating a growing demand despite depreciation challenges.

• Demand for used electric cars has picked up as prices have fallen, with these vehicles selling up to five days faster than petrol cars.

• Demand for used electric cars has picked up as prices fell, suggesting that these vehicles will prove popular once they are no longer more expensive than petrol rivals.

Massive production increases in 2024–2025 have led to a surplus of new inventory, causing prices to drop across the used market. This creates a unique situation. For sellers, depreciation feels worse. For buyers, it creates an opportunity to purchase electric vehicles at much lower prices than before.

A high volume of lease returns, estimated at over 1 million vehicles, is significantly increasing supply in the used market. As supply continues to increase, especially from three-year lease returns, the value of used electric cars is expected to come under further pressure as thousands of motorists return vehicles acquired on three-year leases, and resale pressure is likely to continue in the short term.

Looking ahead, the outlook for the used EV market suggests continued volatility, with economic and environmental factors shaping future depreciation rates and buyer demand.

If you're looking to sell your used EV, you can simply plug your vehicle details into an online tool to get an instant cash offer, making the process quick and straightforward.

How Buyers Can Reduce EV Depreciation Risk

While depreciation cannot be avoided entirely, buyers can reduce risk with smarter choices.

Some practical strategies include:

• Choosing popular EV models with strong demand

• Avoiding early-generation or low-range vehicles

• Keeping mileage moderate

• Maintaining battery health through balanced charging habits

• Considering leasing instead of purchasing

Leasing shifts depreciation risk to manufacturers and allows consumers to enjoy EV benefits without long-term resale concerns. This option is especially attractive for first-time EV buyers.

What Future Buyers Should Expect

Looking ahead, EV depreciation is likely to stabilize, but not disappear. Battery prices are falling, production capacity is increasing, and EVs are becoming more affordable. Over time, this should reduce volatility in resale prices.

At the same time, continued incentives, growing supply, and competition from China will keep pressure on used EV values. For future buyers, the advantage lies in understanding timing and market conditions.

Those who plan to keep their electric vehicles long term will benefit most. Buyers who prefer short ownership cycles may find leasing or buying used to be the smarter financial move.

Final Thoughts on EV Depreciation

Electric vehicles offer real benefits, from lower running costs to reduced emissions. However, EV depreciation is real and significant, and it affects total ownership costs more than many buyers realize.

Electric cars generally depreciate faster than ICE vehicles, especially in the first few years. Battery health, incentives, supply pressure, and rapid innovation all play a role. The good news is that informed buyers can use this knowledge to their advantage.

Whether you are buying new, shopping used, or deciding when to sell, understanding depreciation gives you power in an evolving electric car market.

• What is the average lifespan of an electric car?

  Modern electric cars typically last 15–20 years or 100,000–200,000 miles. Batteries degrade gradually and are usually covered by 8-year or 125,000-mile warranties.

• What is the biggest downside of owning an electric car?

  The biggest downside is rapid depreciation, driven by high upfront costs, fast-moving technology, falling battery prices, and strong incentives for new EVs that reduce used values.