LEAF and other EVs top UK 1-year depreciation charts

[nedfunnell]

At least in the United Kingdom, EVs seem to lose a lot of value in their first year. LEAF comes in at 5th worst, preceded by all three versions of the Mitsubishi i (MIEV). The one separating them from the LEAF is an $85k luxury VW.

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How is depreciation looking in the US? High depreciation would work well for me since I am waiting for cheap EVs to enter the used market, but it does not bode well for EV owners in general.

 

[ERG4ALL]

In comparison with other ICE vehicles, this is kind of mixing apples and oranges. The high depreciation is diue to the high obsolescence factor that any new technology will have. As the battery technology settles down to some generic rather than proprietary technology, the depreciation should come down to something more like an ICE vehicle.

 

[DNAinaGoodWay]

High depreciation is good if you're looking to buy used. Not so good if you bought and want to sell, but a lot of early buyers planned to keep it until it died. Lease returns are getting offers of up to $5k off the residual, so that turned out to be an even better way to buy. Most in the US leased. Probably most will turn it in due to the degradation issue. Wait until the higher range cars arrive and you'll be able to get a used first gen EV dirt cheap.

 

[kubel]

Tax credits aren't being factored in. As soon as you take ownership of the car, without even factoring in any of the normal new-car-driven-off-the-lot depreciation whatsoever, the market will reduce the value of the car by $7500 immediately.

Depreciation is still bad, relative other EVs, but it's not as bad as the numbers suggest due to the credits.

 

[nedfunnell]

I thought about the effect of the tax rebate too, but I don't think that the rebate should be subtracted from the diminished value. The function of the rebate is to make an expensive but socially prudent investment more attractive to consumers. The government does this to encourage socially prudent behavior because the cost of EVs is too high for widespread adoption without such an entitlement. This is another way to say that the cost of the car still exceeds its value to consumers that it needs government assistance to make it in the market. That's not a knock on EVs, the same has been true for many technologies. New things require protection before their potential comes around and their strengths outweigh their weaknesses, like babies, or the Dallas-Fort Worth airport.

Markets decide the value of a good or service, and in this case, I think you're correct that the tax credit has effected this metric- but not in the same way. It allowed the LEAF and other EVs to come to market when their cost-to-value ratio was unfavorable because that was adjusted for the first purchaser. The second transactions occur at real/market value, however, and those show the original cost-to-value ratio PLUS depreciation.

I, for one, will be glad to let someone take the depreciation hit off the lot, ignore the original cost, and buy an EV when their market costs line up with their value in my budget. :thumbsup: