Advertisement

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

Follow Antony

2013 Chevrolet Volt

2013 Chevrolet Volt

Enlarge Photo

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.

+++++++++++

Follow GreenCarReports on Facebook and Twitter.

Advertisement
 
Follow Us

 

Have an opinion?

  • Posting indicates you have read this site's Privacy Policy and Terms of Use
  • Notify me when there are more comments
Comments (8)
  1. $12K for a 5 year old Volt....maybe but less than $7500 for a 5 year old Leaf, is that really going to happen?

    I expect them to do better, mostly because they are going to be relatively rare on the second hand market and used they come within range of people who are willing to pay more for green/low running cost but haven't got the cash to buy new.

    I don't expect the sort of bargains the crystal globe watchers predict are going to be available come 2015.
     
    Post Reply
    +2
    Bad stuff?

     
  2. I think the used car price with greatly depend on the battery condition. 5 year old Leaf will cost about 50% of new one, but after 50 miles test drive :)
     
    Post Reply
    +1
    Bad stuff?

  3. Leaf is going to have issues...the Volt...not so much.
     
    Post Reply
    0
    Bad stuff?

  4. Any data on the Tesla Roadster? They seem to have better then average residual.
     
    Post Reply
    +1
    Bad stuff?

  5. These numbers are based on somebody's WAG. (Wild Ass Guess). Pay no attention to them.

    What will gas prices be in 2018? What will gov't incentives be for electric cars? (Which will determine new car prices, and trickle down to affect used-car prices.) Etc. etc.

    Just last May, GCR quoted NADA as saying a year-old Leaf held 95 percent of its value--better than a Corolla or Prius. Wonder what they'll be saying six months from now?
     
    Post Reply
    +3
    Bad stuff?

  6. If Leaf is really only hold 20% of its value (~$7k), then I am really going to pick one up.

    The key is that if Leaf's battery is going to drop to about 60% after 5 years, then it becomes an EPA rated 44miles EV. At that point, its winter/summer uses becomes a 35 miles (another 20% loss due to Heat/AC usage) range car. At that point, it is almost useless. Especially if the newer EVs are cracking the 150 miles range limit.

    But for $7k, I will pick up a 44 miles Leaf for fun. :)

    That is just enough for my commute of 45 miles round trip (with charging at work).
     
    Post Reply
    +1
    Bad stuff?

  7. The major factor for pure electric cars will be the miles put on the battery. If Leaf's battery is warrantied for 100k miles and the car has gone 90k, that car's value will obviously be very low. However, Tesla came out with the price of the battery pack for Model S recently. The 85 kWh pack costs about $12,000 today. So if 10 years from now, I can buy a leaf for $5,000 and put a brand new battery for another couple of thousands, it certainly is worth it. Now go and change an ICE for that price!
     
    Post Reply
    Vote
    Bad stuff?

     
  8. $12,000 is cash upfront today. No interest and no refund... The real cost is about 2x of that today. It will help Tesla's cash flow and it is similar to insurance.
     
    Post Reply
    Vote
    Bad stuff?

 

Have an opinion? Join the conversation!

Advertisement
New Car Price Quotes
Update ZIP
We are committed to your privacy. By submitting this form you agree the phone number you provided may be used to contact you (including autodialed or pre-recorded calls). Consent is not a condition of purchase.

Find Green Cars

Go!
Advertisement

Advertisement

 
© 2014 Green Car Reports. All Rights Reserved. Green Car Reports is published by High Gear Media. Send us feedback. Stock photography by izmo, Inc.