Electric cars suffer from “unsustainable levels of depreciation” as they lose an enormous amount of their value in just three years of ownership, The Telegraph reports, citing Auto Trader’s latest data.
EVs lost almost 50% of their value in 3 years
Electric cars’ value reportedly drop by almost half in just three years on the road, demonstrating their faster depreciation rate compared to traditional petrol-powered cars.
As per the report, used battery electric car prices declined by 23% in 2023 alone. For instance, a £50,000 electric car may suffer from a £24,000 value drop over three years. Meanwhile, a petrol car with the same price could only £17,000.
Used electric car value declined last year as COVID-induced supply shortages alleviated. Soaring electricity prices also hit demand, while petrol prices recorded a two-year low.
2024 forecasts
Auto Trader indicated that electric cars’ residual values “remain unsustainably low.” It can even bear further pressure in 2024 as thousands of drivers tend to return their 3-year leased electric cars, while automakers lower new car pricing.
“With over 800,000 new electric cars registered between 2020 and 2023, supply returning to the used car market will only increase in 2024, and if demand does not keep up, electric cars could depreciate even further, undermining both consumer and retailer confidence.”
Auto Trader
Notably, electric automakers continue to launch record discount programs to stimulate demand for new electric vehicles. Average discounts reached 10.6% in December 2023, up from just 4.8% in the prior year.
Chinese dominance
Interestingly, the report also forecasts an imminent surge of new Chinese electric cars in the market, which can substantially lower electric car prices. It also expects to see one in six electric car sales in Britain originate from Chinese players by 2030.
In the UK, BEV sales increased by 18% in 2023. However, its share only hit 16.5% of new car sales, slightly down from the prior year.
Starting this month, electric cars must contribute 22% of all automakers’ sales. That said, they would highly likely launch new discounts and price cuts to attract more customers.
Despite all these, government subsidies (ended in 2022) are still necessary to make electric cars more affordable for drivers. Lowering new and used electric cars’ prices to match or beat their petrol-powered counterparts will be significant for the UK government’s updated target to ban petrol and diesel car sales by 2035
