By James Bebarski
When looking into the cost and resale value of a new electric vehicle (EV), a prospective buyer might be shocked to find that the bluebook value of the car they are looking at plummets after 3-5 years. Taking such a hit when it comes to resale value may discourage some potential EV buyers, especially because there is no tax credit available to a potential buyer who purchases an EV used. According to a study done by iSeeCars.com, electric vehicles take the no. 1 and 2 spots for vehicles with the highest depreciation over a 5-year period, with the Nissan Leaf at no. 1 and the Chevrolet Volt at no. 2. Over a 5-year period, the Nissan Leaf depreciates by 71.7%, and the Chevrolet Volt at 71.2%.
Those 5-year depreciation figures may seem daunting, but they also account for the early years in EV innovation. Because battery technology has improved so much in recent years, a depreciation rate of 71.7% over a 5-year period makes quite a bit of sense. A Nissan Leaf in 2014 had a battery range of only 75 miles, while a Nissan Leaf built in 2019 has a battery range of 151 to 226 miles - 2-3 times the distance you could get on a charge five years ago.
According to research by Bloomberg New Energy Finance (BNEF) on battery pricing, “Since 2010, lithium-ion battery prices have fallen 73% per kWh. Manufacturing improvements and more than a doubling in battery energy density are set to cause a further fall of more than 70% by 2030.” Forecasts also predict that between 2020-2030 the decrease in price per kWh will decline at a slower rate, allowing for more price stability for the purchase of a new EV. More price stability at purchase and the perfection of battery technology will certainly lead to improved resale values when you decide to sell your EV and get something newer. This will also encourage the purchase of used EVs by those who can’t afford a new EV.
As average mileage continues to improve in EVs and batteries become more efficient and cheap, the difference in price between internal combustion engine and electric vehicles will rapidly close. When you account for the decrease in tax credits for certain new electric vehicles and improvements in battery technology, the rate of depreciation for EVs will be much lower by 2030 than it is today.