Latest national data indicates that electric vehicles (EVs) are facing some of the most alarming depreciation rates on record. In reality, certain makes and models can depreciate as much as half their purchase price after only one year! As buyers navigate the trade-in process, many are confronted with significant declines in their vehicle’s worth, raising questions about the long-term viability of EV investments.
Assume the owner of a 2024 all-wheel-drive (AWD) model purchased it for $100,000. They only drove the vehicle for 19,623 miles, but they were given a trade-in offer of only $63,100. These numbers suggest that the rapid depreciation rate is an astounding 37% in under a year. Of course, drastic reductions in value are common in the EV market. Sudden leaps in technology, alongside shifting consumer habits, fuel these dramatic drops just as quickly.
In a similar case, the owner of a high-end $127,000 Cyberbeast, purchased just last September, experienced an even more pronounced loss. After eight months, the owner was able last week to sell the vehicle for $78,200, a depreciation of 38%. This is an alarming drop to see, especially given the stakes of investing solely in innovative, expensive electric vehicles. These vehicles incur a greater risk of depreciation as new vehicle technologies and features rapidly enter the marketplace.
Additionally, as experts point out, trade-in estimates almost always underperform relative to private-party sales. This gap creates additional confusion for owners that are thinking about selling their vehicle. Inevitably, trade-in offers are going to disappoint most submitters. This stark contrast is likely to frustrate those expecting higher returns on their investments.
The quick and deep depreciation of EVs as a category raises larger questions about their long-term value proposition. As consumers demand more and more information like resale value when deciding to buy electric models, transparency will become ever more important. Early adopters took major financial hits, which would likely deter future consumers. This experience highlights the key role that public policy will play in the auto industry’s evolution.