Do electric cars hold their value?

How much money will an electric car lose after the first few years of its life and what factors contribute to depreciation? This handy guide tells all.

Electric cars aren’t just different from petrol or diesel cars under the bonnet – they also differ when it comes to value over time. If you’re thinking about making the switch to an EV, you’ve probably wondered: do electric cars depreciate faster or slower than traditional cars?

Like all cars, EVs depreciate, but whether they do so faster or slower than traditional cars is far more nuanced. In this guide, we’ll break down exactly what depreciation is, how electric cars compare to their petrol- and diesel-powered counterparts, and which models tend to hold their value best (and which don’t).

Remember, you can buy a brand new or used car right here on Carwow. And you can sell your car, too. We’re here to help you through every step of your car-changing journey.

What is car deprecation?

Car depreciation is the difference between what you paid for your car when new and what it’s worth today if you sold it. It refers to the drop in value as a car goes from being brand new to second-hand.

Unlike some assets, such as houses, luxury watches, or rare classic cars that may appreciate in value, most cars lose a percentage of their value over time.

In the car industry, this is often measured using residual value (RV), which is the percentage of the car’s original price that it still retains. For owners, a higher residual value is better, as it means their car has held onto more of its worth.

For example, if a car loses 60% of its value over three years or 36,000 miles, it has a residual value of 40%.

Be careful not to confuse the terms: depreciation is the percentage lost, while residual value is the percentage retained.

Of course, there’s another side to depreciation – it works in favour of used car buyers. By the time a car is three years old, it has usually already lost a large percentage of its value. From that point, its rate of depreciation tends to slow down, meaning the buyer’s asset loses value more gradually.

How quickly do electric cars depreciate versus petrol, diesel and hybrid cars?

The industry is seeing mixed residual value trends in the EV market. Some premium models such as the Porsche Taycan, Mercedes EQC and Volvo EX90 hold their value pretty well – anywhere between 55% and 77% after three years or about 36,000 miles. But on average, EVs don’t fare as well, keeping only around 39% of their value. By comparison, petrol, diesel, and hybrid cars usually do better, holding onto about 52-56% over the same period.

Part of the reason prices are high across the board is that there just aren’t enough used cars to go around. Thanks to the knock-on effects of the global chip shortage a few years back, it’s estimated there will be around 500,000 to 700,000 fewer used cars available this year. That lack of supply is pushing values up for everyone.

On top of that, the government’s latest EV incentives only apply to new cars, not used ones. That’s created a bit of uncertainty in the market and could make it tougher for used EVs to hold their value, or for buyers to get decent financing deals.

What factors contribute to electric car deprecation?

The primary drivers of any car’s depreciation are age and mileage. Generally, the older a car is, the lower its value. (Classic cars, after several decades, may increase in value due to collector demand.)

Other factors that help maintain value include:

• Keeping the interior clean and smoke-free.
• Maintaining the exterior with no scratches or kerbed wheels.
• Keeping a full service history and receipts

However, electric cars have unique considerations:

• Battery health: While modern EV batteries degrade slowly and often retain most of their range, significant loss of capacity can lower resale value.
• Market demand: Early EVs depreciated quickly due to niche appeal and limited range. Today, many EVs are in high demand, sometimes outperforming equivalent petrol or diesel models in residual value.
• External incentives: Government schemes, congestion charges, clean air zones, and growing environmental awareness all support stronger EV resale values.

Overall, EV depreciation is influenced by traditional factors such as age and mileage, but battery condition, evolving market demand, and policy incentives play a bigger role than with conventional cars.

How long does an electric car battery last?

Electric car batteries are built to last a long time – usually 10 to 20 years or 100,000 to 200,000 miles. Like the battery in your phone, they slowly lose a bit of capacity over time, but most manufacturers (Peugeot, Tesla, and Kia to name a few) back them with an eight-year or 100,000-mile warranty. And in the UK, there’s a new rule that says EV batteries have to be covered by a warranty for at least eight years or 100,000 miles – but only if the battery drops below 70% capacity.

There are a couple ways to help your EV battery last longer: avoid using rapid chargers too often and try not to charge up to 100% all the time. Think of it like your smartphone – keeping it between about 20% and 80% generally helps it age more gracefully.

Even when an EV battery has run its course for driving, it’s not useless as many can be repurposed for home energy storage or other projects.

Does the brand of an electric car matter?

Yes, the manufacturer can influence how well an EV holds its value. Cars from brands known for reliability or low running costs tend to depreciate less.

Desirability is another big factor. Popular brands with strong reputations, attractive designs, or in-demand body styles, such as SUVs, usually maintain higher residual values. This applies to EVs just like it does for petrol and diesel cars.

In the EV world, brand perception can also be tied to technology and battery quality – brands with a track record of long-lasting batteries and good software updates often see better resale prices.

Car change? Carwow!

Looking for a new set of wheels? With Carwow you can sell your car quickly and for a fair price – as well as find great offers on your next one. Whether you’re looking to buy a car brand new, are after something used or you want to explore car leasing options, Carwow is your one stop shop for new car deals.

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