EV Depreciation Hits Harder Than You Think
EVs lose value almost 30 % faster than gas cars. A March 2025 iSeeCars analysis found that electric vehicles depreciate 58.8 % of their value over five years, compared to 45.6 % for all vehicles (including gas, hybrid, and diesel) over the same period. In other words, EVs shed value roughly 28.9 % faster than the average gas car over five years.
Depreciation by Model: The Brutal Breakdown
Tesla owners often boast about over-the-air updates, but fewer talk about trade-in quotes. Some of the most extreme examples:
- Cybertruck: One owner paid $100,000 and saw roughly 37 % of its value vanish in about one year—traded in around $63,100 after ~19,600 miles and ~12 months.
- Rivian R1T: While not a top resale performer overall, the R1T lost just 29 % of its value in two years (retention 71 %). Over five years, it loses 52.8 % (retention 47.2 %).
Mass-market EVs face steeper markdowns:
- Nissan Leaf: Loses 64.1 % in five years, versus ~45 % for a typical gas car.
- Hyundai Kona Electric: Loses 58 % in five years, well above the gas average.
- Kia Niro EV: Sheds 56.5 % in five years, again above a gas-only car’s average loss.
Three Key Reasons EV Resale Value Is Sinking
- Rapid Tech Turnover: A next-generation battery or major software update can make last year’s “cutting edge” feel outdated overnight.
- Fading Tax Incentives: The $7,500 federal EV tax credit is available only to the original purchaser of a new EV and cannot be transferred to the next owner. This effectively reduces the used-car sale price by up to $7,500 relative to a gas counterpart.
- Glut of Off-Lease EVs: As more leases expire, used-EV supply increases, driving down second hand prices.
Examples that sting:
- Jaguar I-Pace: Luxury badge, budget-store value, 72.2 % gone in five years.
- Tesla Model Y: Bestselling EV but still drops 53.4 % in five years.
- Tesla Model S: Among the worst, losing 65.2 % in five years.
- Rivian R1T: Two-year loss of 29 %, but over five years that grows to 52.8 %.
Roughly half of all EV models lose ~59 % by year five; about a quarter lose more than ~63 %. Models like the Jaguar I-Pace (72.2 %) and Tesla Model S (65.2 %) suffer the steepest drops, while the Hyundai Kona Electric (~58 %) and Volkswagen e-Golf (~53 %) hold more of their sticker price.
Smart Strategies to Avoid the EV Depreciation Trap
- Hold Longer: If you keep an EV for at least five years, you spread that 45-73% drop over more ownership years, making the annualized hit smaller.
- Leasing: Many EV leases guarantee a 40–50 % residual value after three years (e.g., Tesla’s 36-month residuals often fall around 50 %). That shields you from the steepest depreciation.
- Used Tax Credit: Remember that the next owner can’t claim the $7,500 credit, effectively lowering resale by that amount.
- Hybrid or Gas Alternative: Hybrids lose only ~40.7 % over five years; gas vehicles average 45.6 % loss. A well-chosen petrol or hybrid car can be a safer bet if you’re concerned about resale value.
Don’t be fooled by shiny EV ads: they generally lose value faster than traditional cars. If you plan to keep an EV long-term, the depreciation hit is unavoidable, but it can be softened by holding the vehicle, leasing, or choosing a hybrid/gas model instead.