According to an iSeeCars study, electric vehicles are the worst in terms of holding value, while hybrids and pickup trucks are the best at retaining value over a 5-year period. iSeeCars stated:
Electric vehicles are the worst segment at holding their value, losing 49.1 percent in five years. Trucks and hybrids retain the most value, losing only 35 and 37 percent, respectively.
On the plus side for EVs is that, back in 2019, electric vehicles lost an average of 67.1 percent of their value after 5 years. Now, that number has significantly improved by 18 percent and stands at 49.1 percent.
There's quite a big spread between EVs at 49.1% and hybrids at 37 percent, some of which can be explained by the federal tax credit offered on electric vehicles. Karl Brauer, iSeeCars executive analyst, explains what's at play here:
Between incentives that effectively lower an EV’s price before it’s even purchased and concerns about battery replacement costs, used electric vehicles have always suffered higher depreciation than equivalent gasoline cars. This pattern will continue until electric vehicles don’t require heavy incentives to sell and consumers gain confidence in their long-term ownership costs.
If we look at individual electric cars, there's quite a big spread in 5-year depreciation percentages too. The Tesla Model 3 holds its value the best, while the Model S loses the most. There are only a few models listed below. That's because there are not many EVs that have been on the market for 5 years or more, or because the sample size of some of those rarer EVs is too low.
A key takeaway here is that for buyers interested in purchasing a used EV, the high level of depreciation means that there are some killer deals out there. Also, we should point out that if you are buying a new EV, then be prepared for it to lose a significant amount of its value over the next 5 years. However, this should not deter you from buying the EV of your dreams. Its just something to keep in mind.