Electric cars halve in value after just two years

Telegraph

29-05-2025

Cox Automotive said the faster rate of depreciation among 'nearly-new' EVs was being driven by the discount wars being fought by manufacturers, which have been aggressively cutting prices to help them meet net zero sales targets.
Under the so-called zero emission vehicle (ZEV) rules which are mandated by the Government, 28pc of new car sales are meant to be electric this year with the target set to rise gradually until it reaches 80pc in 2030.
The falling value of EVs is also being accelerated by the growing range of cheaper models available on the market.
The average price of a second-hand EV fell from £39,849 to £24,908 between April 2022 and April 2025, according to Autotrader.
Philip Nothard, of Cox Automotive Europe, said used-car prices reached a peak in 2022 as the pandemic squeezed global supplies of new vehicles.
But he added: 'The current performance of nearly-new EVs in the used market is still much lower than we would anticipate for vehicles in this age profile.
'The heavy discounts offered on new vehicles mean that consumers can pick up a brand-new model for the same price as a nearly-new model.
'This gives consumers very little incentive to consider them, which is a real blow to a market that needs all the incentives it can get its hands on.'
Compared with nearly-new models, Mr Nothard said that 'middle-aged' EVs between three and five years old were faring better.
These only saw their prices fall by about 15pc over a similar period when they were sold at auction, Mr Nothard said.
Brands made price cuts worth £4bn on new cars last year, equivalent to a discount of about £11,000 per car, according to the Society of Motor Manufacturers and Traders.
While discounting is a common practice, the level of discounts on EVs has been higher than those for petrol and diesel cars, according to Autotrader.
Falling EV values are positive for consumers, but the accelerated drop has become a cause of concern within the car industry.
Fleet operator fears
Fleet operators such as car rental companies, which accounted for two thirds of all new car purchases last year, tend to buy new vehicles and sell them on after two to three years.
The growing drop in resale values means they risk recovering far less of their initial investment than anticipated.
In 2023, the EV leasing firm Onto collapsed into administration as it was forced to write down the value of its 7,000-strong fleet by £21m in a single year.
The British Vehicle Rental & Leasing Association (BVRLA) last year warned that many fleet operators were having to swallow large losses when reselling EVs because of 'unsustainable' depreciation.
It said rising depreciation costs could force leasing companies to raise prices for consumers, in order to better shield lenders from losses.
The BVRLA has called for the Government to intervene with market stimulus measures, including potentially a VAT cut or grants for used car buyers.
Mr Nothard said: 'The used market is a crucial source of profitability for the automotive sector.
'Within increasingly volatile market conditions, the strength and consistency of used operations are crucial.