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What loss of value can be expected for electric cars?



As soon as you have found your dream car and proudly drive your first meters, the car has already lost value - they say. But is this only the case with the combustion engine? Are e-cars really more stable in value? How it actually behaves with the depreciation of electric cars - we will enlighten you.

You may be asking yourself the question: "New car or used car?" Or you're not sure if it's worth buying an e-car if you might want to sell it again in a few years. The loss of value, or the residual value, of your car undisputedly plays a major role.

When it comes to the loss of value of electric cars, opinions differ. It is true that older electric cars lose value more quickly. On the one hand, this is due to technological change. In other words, new vehicles are a big leap ahead of older e-cars in terms of technology. On the other hand, the performance of the vehicle also decreases over the years: buying an electric car that only achieves half the original range is not very attractive for many drivers.


You may now be wondering how it is with today's new electric cars, whether they will also be less attractive for resale in old age. Or is today's technology good enough to ensure peak reach in the long term? How much will your newly bought electric car still be worth in 3 or 4 years?


To answer these and other questions, we spoke to Robert Madas, Regional Head of Valuations in Switzerland, Austria and Poland, and Hans-Peter Annen, Head of Valuations Switzerland, from the Autovista Group. Our two experts are real professionals when it comes to price analyses and value classification of vehicles. Autovista Group collects and analyzes pricing and specification information on a daily basis that drives the European automotive market. This is exactly the knowledge we have picked up for you.

This is how the depreciation of electric cars is calculated

Perhaps you have already wondered how the value of a used electric car is determined in the first place. Robert Madas reports: "The residual value is determined on the basis of the offers on the market. The vehicle (regardless of whether it is a combustion engine or a purely electric vehicle) is compared with comparable models." According to the expert, the focus is on the following components:

  • Age
  • Kilometrage
  • Equipment
  • Brand
  • Model
  • Technical data

The depreciation of e-cars compared to gasoline and diesel vehicles

Gasoline, diesel, electric car or rather hybrid: Which type of vehicle is likely to have the least loss of value? It is impressive, for example, that "young electric vehicles are very stable in value up to an age of around 12 months. On average, they are often more stable in value than vehicles with other drive types such as diesel, gasoline and hybrid," says Robert Madas. However, the higher the age, the faster electric cars lose value to their competitors.

Specifically, young, purely electric vehicles achieve about 4 percentage points more residual value than comparable combustion models. The situation is different with older age: "A 4-year-old combustion engine that has driven around 80,000 km achieves about 55% residual value, the electric car still 50%, i.e. 5 percentage points less," explains Robert Madas. However, both are still remarkable results.


It is also exciting that "the average residual value of electric vehicles today is around 8% higher than in 2020." However, Robert Madas emphasizes that the loss in value or the residual value can vary from segment to segment. Therefore, it is worth comparing SUV with SUV or mid-range with mid-range. This is the only way to get reliable results – and not by comparing a city runabout with an off-road vehicle.

Shortly:

  • In terms of depreciation, electric vehicles perform better than combustion vehicles up to the age of 12 months.
  • Electric vehicles from 3 – 4 years, on the other hand, show a greater loss of value or a lower value than comparable combustion models.
  • The depreciation varies from segment to segment.

Why do electric cars lose value and what influences the loss of value?

Basically, the newer an e-car is, the better for the owners. This is because newer electric vehicles usually still have a warranty promise from the manufacturers on their batteries, a considerable range and are based on more modern technology that allows functions such as fast charging. This is also reflected in the loss of value of electric cars.


Robert Madas comments: "In recent years, there has been an enormous technological leap in all-electric vehicles. If we look at the range of 4-5-year-old electric cars, there is a clear difference to modern models. Be it in terms of battery capacity, range or charging speed. Older models, for example, are often not sufficiently equipped to handle high currents for fast charging." In addition to technological advances, however, there is also another reason for the jump in residual value: "In the past, list prices for electric vehicles were significantly higher than comparable combustion engines."


However, the battery capacity has priority over all of them. The smaller the capacity of an electric car battery, the faster the vehicle in question loses value. These vehicles are then used more for short distances or as a second car. Conversely, it can be said that the more battery capacity a car has, the more stable the vehicle's value. Hans-Peter Annen observes that this is a decisive factor, especially in Switzerland: "The Swiss population is very concerned about safety – a higher battery capacity means more range and more safety when covering kilometres."

Shortly:

  • The loss of value of older electric vehicles is primarily caused by the technological leap of recent years.
  • Battery capacity, range and charging speed have an enormous influence on the residual value of an electric car.
  • The larger the battery capacity, the more stable the value of the car.
  • In addition, list prices for electric cars used to be significantly higher.

Buying and selling an electric car: What do you need to consider in terms of residual value?

If you want to buy an electric vehicle, knowing that you might want to sell it again, you should consider the following aspects:

"In principle, vehicles from popular segments such as small cars, mid-size cars or compact SUVs as well as mid-size SUVs are particularly stable in value. E-vehicles with a high battery capacity and fast-charging function are also always ideal," advises Robert Madas. These models can be sold again in terms of price even after some time in use. "Vehicles from the luxury class, as well as large SUVs or models from the micro class, record a higher depreciation and thus lower residual value."

How quickly can I sell my used e-car?

For used e-cars, it takes 80 days from the day the ad is created to the actual sale (market data from AutoScout24, as of 2023). New electric vehicles even "sell like hot cakes" and are on the market for an average of only 70 days (market data from AutoScout24, as of 2023).

In turn, it is not possible to make a general statement in relation to specific brands, as each manufacturer has a very different portfolio. "As a rule of thumb, you can say that the younger, the more modern, the higher the battery capacity and the more popular a model is, the better for resale." According to Hans-Peter Annen, it is also important to note: "There is movement in the e-market, the range of models will increase significantly and more and more manufacturers will be more and more broadly positioned."

Shortly:

  • Vehicles from popular segments and with modern technology are the most stable in value.
  • In terms of value stability, no specific brand stands out.

What do you need to know about the electric car market

Currently, the residual value of electric cars, as well as combustion engines, is showing a downward trend - but at a good level. If you currently want to sell your electric car, according to Robert Madas and Hans-Peter Annen, you can expect up to 71% residual value from the list price for a 12-month-old car with 20,000 km of mileage when traded in at the dealership. This figure is slightly higher than that of hybrid, diesel and petrol vehicles.


If, on the other hand, you want to buy a used electric car, it's best to follow this tip from Robert Madas: "It's always interesting when you find a young used car. About a year old – and you save a lot of francs and still have almost a new car with very good performance."

What influence does the chip crisis or semiconductor shortage have on the value of electric cars?

In particular, the Corona pandemic, but also the conflict between Russia and Ukraine, have presented electric car manufacturers with a new challenge: the semiconductor shortage, also known as the chip crisis.


Electric cars – like all vehicle types – depend on chips and their basic component, semiconductors, for their functionality. The circumstances of the past 3 years have meant that manufacturers have lacked semiconductors and thus chips. This led to delays in production and thus fewer new registrations on the market. At the same time, however, demand has remained normal. This has also had an impact on the used car market – a smaller supply of new cars today leads to fewer used cars tomorrow. This has inevitably been associated with higher residual values of used cars, combustion engines and e-cars in recent years.


Hans-Peter Annen has made another exciting observation: "What we have seen during the pandemic is an increased demand for older vehicles. The reason for this could be that more people want to avoid public transport and switch to individual mobility. And: Older used cars were therefore in greater demand."

Residual value problem: Is leasing of e-cars the solution?

The used car market is full of uncertainties. This can sometimes be good for the wallet – sometimes not. In order to circumvent precisely these uncertainties, leasing can be the ideal solution to the residual value problem. It is important that you pay attention to the form of leasing itself: With mileage leasing, the residual value at the end of your use does not play a role.

If you want to learn more about leasing electric cars, we recommend this exciting blog post.

The performance of electric cars in the future: What's next?

It is not easy to make concrete forecasts for the market. Rather, it is worth taking a look at past developments. "Overall, it can be seen that the residual value has grown very much in the last two years – also due to the low supply and increased demand," says Robert Madas. Since the end of 2022, however, the supply and price situation has improved significantly again, according to the experts.

You really want to know what the current price development for e-cars or combustion engines looks like? The Autovista Group informs you monthly with the latest figures and developments on the car market free of charge. Especially for Switzerland.

In total, there are now about exactly the same number of used cars on the market as before the pandemic. The market is likely to follow this trend in the future as manufacturers have found new production methods and repositioned themselves. "There is a shortage of offers from young vehicles between one and two years old," adds Robert Madas. This is where the gap in new registrations from the Corona pandemic is making itself felt.

Shortly:

  • Currently, up to 71% of the list price for a one-year-old electric vehicle can be expected to be traded in at the dealer – depending on the segment and mileage.
  • The Corona pandemic and the Ukraine war caused a chip and supply chain crisis, which has meanwhile led to fewer new registrations and increased prices for used cars.
  • In the meantime, the market has recovered and the volume of available used cars is almost back to pre-crisis levels, and the residual values are showing a downward trend.