The old saying goes, a car loses value as soon as you drive it off the lot. Unfortunately, it’s true. A brand-new vehicle can lose nearly half its value within the first five years of ownership. But while depreciation hits every car, electric vehicles (EVs) tend to take an especially large hit — and the numbers can be startling.
EVs have clear advantages over gas cars: lower operating costs, minimal maintenance, and the ability to charge at home instead of spending at the pump. Yet many EV owners are shocked when they discover how little their vehicle is worth when it’s time to sell.
Analysts have grown increasingly concerned that poor resale values could slow down EV adoption. While cheaper used EVs might attract some buyers, new car shoppers often hesitate to invest in a technology that loses value so quickly. Let’s take a closer look at why EVs depreciate faster — and what this means for the future of electric mobility.
The Numbers Behind EV Depreciation
A recent study by iSeeCars revealed that nearly a quarter of the worst-depreciating vehicles were electric. Some of these cars suffered particularly steep declines in value over a five-year period.
- The Jaguar I-Pace, now discontinued, lost an astonishing 72% of its value in five years.
- Tesla’s Model S, Model X, and even the Model Y all saw depreciation of at least 60%, roughly the same as the Porsche Taycan.
- Even more affordable models, like the Nissan Leaf, made the list of the biggest losers in resale value.
In contrast, traditional gas-powered cars performed far better. The Porsche 911, one of the most coveted sports cars in the world, retains its value exceptionally well despite its high initial price tag. Another Porsche, the Boxster, follows close behind.
The contrast is striking: while the Taycan — a Porsche EV — plummets in value, its gas-burning siblings barely budge. On average, EVs depreciated 59% over five years, compared with an industry average of 46%.
Depreciation and the Total Cost of Ownership
A car’s depreciation rate plays a huge role in determining its total cost of ownership (TCO) — the real cost of owning a vehicle from purchase to sale. Depreciation is essentially the difference between the price you paid and the amount you recoup when selling.
For EVs, depreciation matters even more because automakers are trying to move beyond early adopters and into the mainstream market. Mainstream buyers tend to be value-driven. They look not only at upfront costs but also at what they’ll get back when it’s time to sell.
If EVs continue to lose value so rapidly, potential buyers might decide that the long-term cost simply isn’t worth it — no matter how much they save on fuel or maintenance.
Why EVs Depreciate Faster
Several key factors contribute to the high depreciation rates of electric vehicles.
1. Incentives Lower Perceived Value
When you buy a new car, it loses about 10% of its value the moment it leaves the dealership. That’s because new cars often come with discounts or incentives — cash rebates, tax credits, or lease deals — that lower their market value.
EVs, in particular, have benefited from generous government incentives over the past decade. While great for buyers, these incentives inadvertently hurt resale value. A used car buyer factors in the fact that the original owner received a discount. Even if you didn’t get an incentive, the market assumes the car is worth less because many buyers did.
2. Rapid Technological Advancements
EV technology is evolving at breakneck speed. What was cutting-edge three years ago now seems outdated.
Consider this: over the past decade, the maximum EV range has nearly doubled, and the median range has tripled. Newer EVs are also adopting 800-volt architectures that can cut charging times in half, while older models remain on 400-volt systems.
This kind of progress mirrors the tech industry more than the auto industry. A three-year-old smartphone feels old — and so does a three-year-old EV. Buyers hesitate to pay a premium for what already feels like last generation’s technology.
3. Battery Concerns and Misconceptions
One of the biggest myths holding back the used EV market is battery degradation. Many potential buyers worry about expensive battery replacements or reduced range over time.
However, recent studies have shown that EV batteries are far more durable than expected. The cost of battery replacement is also falling, and most used EVs entering the market still have strong battery health.
Consumer education will be crucial here. As more people learn that batteries don’t “die” after a few years, used EV values are likely to stabilize.
4. Market Segmentation and Pricing
Another challenge is that many EVs are luxury vehicles—and luxury cars in general tend to depreciate faster.
A buyer looking for a ₹20 Lakh sedan is unlikely to consider a ₹50 Lakh electric SUV. Brands like BYD, for instance, price their best EVs — the Seal and Sealion 7 — at premium levels (₹40–55 lakh).
Meanwhile, the vehicles that hold their value best are typically mainstream models — affordable, practical, and mass-market. Used car buyers are value-driven; they care more about cost and functionality than brand prestige or drivetrain technology.
As long as EVs remain concentrated in higher price segments, their resale values will struggle.
5. Usage Patterns and Consumer Confidence
EVs are generally driven less than gas or hybrid vehicles, according to iSeeCars data. That may sound like a good thing for wear and tear, but it actually signals limited functionality.
Used car buyers think pragmatically: if an EV can’t travel long distances easily or lacks charging infrastructure, it offers less utility. That perception translates directly into lower resale value.
The Changing Landscape of the Used EV Market
Despite these challenges, the used EV market is on the cusp of massive change.
By 2030, it is predicted that more used EVs will become available annually. That surge in supply will naturally push prices lower — but also make EVs more accessible to value-conscious buyers.
Greater volume, increased consumer familiarity, and improving technology could together stabilize resale values over time.
How to Make an EV Hold Its Value
Depreciation only matters up to a point. There’s one proven way to minimize its impact: buy an EV and keep it for the long haul.
Every car — gas, hybrid, or electric — eventually reaches the bottom of its depreciation curve after eight to ten years. After that, it loses very little additional value.
If you buy an EV and plan to keep it for a decade, you’ll likely absorb the same overall depreciation as you would with a gas car. Given the lower running costs of EVs, you may even come out ahead.
This long-term ownership mindset could be key to helping consumers embrace EVs more confidently.
Or you could opt for an EV with a clear buyback guarantee like MG Windsor EV.
The Road Ahead
Electric vehicles are still finding their footing in the market. Their technology evolves rapidly, incentives distort pricing, and public perception lags behind the reality of battery durability and charging infrastructure.
But as the used EV market expands and buyers become more educated, depreciation rates are expected to normalize. The transition to electric mobility is not just about technology — it’s about changing how people think about car ownership.
If you’re buying an EV, think long-term. The future value of your vehicle might not look great on paper today, but over a decade of low running costs and zero fuel bills, the equation starts to look a lot better.
