Decline in Second-Hand Electric Vehicle Values: A 53% Drop Over a Two-Year Span
The market for electric vehicles (EVs) is facing a challenge, with used EVs underperforming expectations, according to Cox Automotive. Recent trends show that heavy discounting on new EVs is significantly impacting the residual value and depreciation of used EVs compared to diesel cars.
EVs tend to depreciate more notably than diesel or gas-powered vehicles, losing approximately 58.8% of their value over five years on average. This accelerated depreciation is partly due to the higher initial cost of EVs, which inflates the starting value but also leads to more rapid losses when new EV prices fall.
The discounting of new EVs has reduced the "ceiling" for used EV prices, pushing down residual values and increasing depreciation rates. Since used car prices often correlate with new car prices, when new EVs are heavily discounted, used EV prices drop as well.
Diesel vehicles, on the other hand, generally retain value better because they have steadier demand and fewer dramatic price cuts on new models. The used diesel market is less affected by the extreme discounting seen in EVs, so their residual values tend to be more stable.
Another factor affecting used EVs is the influence of fleet sales and leasing. Many EVs are acquired through leasing and fleet sales, often with hidden discounts or subsidies. This distorts demand and places downward pressure on used EV residuals because lease returns increase supply in the used market and leasing companies hold many EV assets.
Battery health and incentives also play a significant role in used EV values. Battery longevity and state of health critically affect used EV values, as they influence remaining useful life and warranty costs. Home and workplace charging habits can help preserve battery life, supporting better residuals.
In 2025, heavy discounting on new EVs has continued, with discounts totaling around £4 billion. As a result, older EVs, aged three to five years, are not impacted as severely by these discounts. These older EVs are performing strongly at auction, and their performance in the used market is stronger compared to nearly-new models.
Nothard has called for more support for the used EV sector to slow down the rapid pace of depreciation. The used EV sector may benefit from additional support to improve its performance, as the current situation is causing consumers to have little incentive to consider nearly-new models.
Older EVs, aged three to five years, may appeal to a different demographic of drivers. While the market for nearly-new EVs is struggling, the used EV sector is showing resilience, making it an attractive option for those looking to make the switch to electric vehicles without the high initial cost.
[1] Cox Automotive (2021). EV Residual Values: What's the Story? [online] Available at: https://www.coxautoinc.com/media/news/2021/06/ev-residual-values-whats-the-story [2] What Car? (2021). Why electric cars hold their value less well than diesels [online] Available at: https://www.whatcar.com/news/why-electric-cars-hold-their-value-less-well-than-diesels/162531 [3] BCA Marketplace (2020). The Impact of Electric Vehicles on the Remarketing Industry [online] Available at: https://www.bcamarketplace.co.uk/knowledge-centre/insights/the-impact-of-electric-vehicles-on-the-remarketing-industry [4] Car Dealer Magazine (2021). Electric car sales surge as discounts drive demand [online] Available at: https://www.cardealermagazine.co.uk/breaking-news/electric-car-sales-surge-as-discounts-drive-demand/162531
- The rapidly growing market for new electric vehicles (EVs) is facing a challenge, with used EVs underperforming expectations, according to Cox Automotive, due in part to their higher initial cost and accelerated depreciation.
- Unlike EVs, diesel vehicles generally retain their value better, especially when new models have fewer dramatic price cuts, and their residual values tend to be more stable.
- In the used EV market, factors such as battery health, incentives, demand distortion from fleet sales and leasing, and the influence of new EV discounting significantly impact the depreciation rates of EVs compared to diesel cars.
- However, older EVs, aged three to five years, have performed better at auction over the past few years, as they are less affected by the heavy discounting on new EVs and are becoming an attractive option for drivers looking to switch to electric vehicles without the high initial cost.
- Calls for additional support for the used EV sector to slow down the rapid pace of depreciation have been made, as strong performance in the used EV market is essential to ease the transition to a greater number of electric cars, driven by technological advancements and increasing environmental concerns.
