Electric Cars Lose Value Quicker Than Others, But Not By Much

By Antony Ingram

Antony Ingram

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Antony is an automotive obsessive: Whether it drives, sits there looking pretty or intrigues from afar, he'll talk and write about it. Automotive... More

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2013 Chevrolet Volt

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If you bought a new electric car today, how much would you expect it to be worth after five years?

Concerns about demand further down the line, and further concerns about battery life, initially led some commentators to suggest that electric vehicles would be nearly worthless a few years after purchase.

That isn't the case, according to the used pricing experts--in fact, they barely lag behind regular vehicles.

Based on initial purchase price, both Kelly Blue Book and ALG (via The Northwestern) say a Nissan Leaf will hold around 20 percent of its value after five years, the Chevy Volt around 30 percent.

That compares to an average of 36.6 percent for the typical compact car.

Incentives make the difference

The figures do look a little low, but as Eric Ibara, director of residual value consulting for KBB explains, the difference closes up significantly when federal and local tax incentives are taken into account.

With most owners paying less than list for their cars, the actual percentage of new value they're losing will be less.

Those incentives, which bring down the overall purchase cost, are also responsible for the larger dip in values in the first place. Used values have to be lower to correspond with the post-incentive new vehicle cost.

The pricing echoes previous suspicions that used car buyers would be unwilling to buy a used Leaf or Volt priced too close to the post-incentive "net price".

Net pricing is the price buyers pay if they're able to benefit from discounts and incentives--often quoted in manufacturer promotional materials.

According to our electric car price guide, you'll currently pay $39,935 for a Chevy Volt, including the mandatory delivery fee. Buyers able to claim the full $7,500 federal income-tax credit will pay only $32,435, and California buyers it's only $29,935 upon receipt of the state's purchase rebate check.

Reliability eases concerns

Ibara also says he doesn't think the heavily-discounted leases available on electric cars will affect future used value too much.

Long warranties and the reliability of batteries in hybrid-electric vehicles has also eased the market's other concerns, that of battery life for second or third buyers. ALG notes notes that initial projections for used Toyota Prius prices were low--before the market discovered the car and batteries were reliable.

Further still, recent high performances from the Volt and Leaf in customer satisfaction surveys have helped ease the market's worries.

Currently, 2011 Nissan Leafs are selling for between $20,000-$24,000 from dealers, with Chevy Volts unavailable for under $30,000.

That represents retained value of 61-73 percent for the Leaf, and no less than 74 percent for the Volt, after two years--from the pre-incentive price.

Are electric cars holding value better or worse than you expected? Leave your thoughts in the comment section below.

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