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Older EVs worth less than gas-powered counterparts
If you bought an electric vehicle years ago, thinking you were ahead of the gasoline curve, a new study has some bad news for you. It turns out older EV models are worth less today than their gas-powered counterparts. The study, published in the journal Environmental Research Letters, analyzed over nine million used vehicle listings from 2016 to 2019 across the United States. Researchers compared how different types of vehicles depreciated by looking at their listing prices versus the original manufacturer’s suggested retail price (MSRP) when new.
Newer EVs closing the gap on gas cars
Despite the financial bummer for long-time EV drivers, researchers from George Washington University have some good news: newer EVs are closing the gap on gas cars, making them affordable options on the resale market going forward. The study found that while conventional gas-powered vehicles and hybrid Electric vehicles tended to hold their value reasonably well over time, plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs) historically experienced much faster depreciation rates.
Improvement in depreciation rates
The newest BEVs and PHEVs were found to be bucking the trend of faster depreciation rates. Each model year, BEVs and PHEVs were retaining around five to 10 percent more of their original value than the previous model year. This held true even after accounting for factors like vehicle mileage, time on the dealer lot, fuel efficiency, and subsidies or tax credits that lowered the new vehicle price.
Factors driving improvement
One key factor driving this improvement in resale value is the increasing range of newer BEV models. Longer driving ranges help alleviate consumer “range anxiety” concerns about running out of battery before reaching the next charger. The study found that for every extra 10 miles of electric range, BEVs retained around 5.6 percent more of their resale value on average.
Market disruptions and future outlook
The used EV market, like the rest of the auto industry, was disrupted by pandemic-related supply chain issues and shortages over the past couple of years. However, as supply constraints ease, those elevated prices should normalize, and the improving residual values will help keep used EVs more affordable. Wider adoption of EVs among more budget-conscious buyers could accelerate as secondhand options become increasingly viable. With improving residual values closing the affordability gap, an electrified future could be coming to a used car lot near you.
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