Electric vehicles (EVs) may have once been the golden child of car buyers, but new data shows their depreciation is accelerating. After retaining 94.8% of their value in 2024, EVs now hold just 84.5% after one year of ownership. What’s behind this surprising shift, and what does it mean for the future of the market?
The Reasons Behind the Shift
The decline in the retained value of EVs is a sign of a few things happening at once. For starters, the new-car market has seen more competition, with new models and brands entering the EV scene. This influx of options and the resulting price cuts have naturally had an effect on the second-hand market. As more choices become available at lower prices, buyers have less incentive to pay a premium for used models.
Another factor is the fast-paced evolution of EV technology. Battery life, range, and charging speed have all improved drastically over the past few years, which means older models quickly start to look outdated. That newer model that promises longer range and faster charging can make an older car feel, well, a bit behind the times. This makes it harder for second-hand EVs to hold their value for long periods.
Electric vehicles (EVs) Still Hold Their Own Compared to Other Vehicles
Despite the increase in depreciation, EVs are still performing better than many other vehicles on the market. In fact, after one year, EVs are still retaining better value than utes (72% retained value) and SUVs (67.5%). This means that while EVs are losing value faster than before, they’re still holding up against traditional vehicles in terms of long-term investment.
The AADA CEO, James Voortman, explains to Drive that the market is stabilizing after the unpredictable surge during the COVID-19 pandemic. The used-car prices during those years were artificially high, but now, things are settling down, and the EV market is moving into a more stable phase. Volumes are growing, which means that more stock is available to meet demand. This stability is positive in the long run but could mean a rough ride for those looking to sell their EV in the short term.
The Role of Buyer Sentiment
Interestingly, buyer sentiment around EVs is shifting, too. There is now greater consumer confidence that EVs are a worthwhile investment due to their relatively better resale value and the rise in charging infrastructure across the country. More Australians are agreeing that now might be a good time to buy an electric car—partly because they’re seeing better retention on used models than they might have anticipated just a few years ago.
What Does This Mean for Buyers?
For those looking to buy an electric car, the question is whether or not the depreciation rate will settle down after this adjustment period. If you’re purchasing a new model with the expectation of holding onto it for the long term, you might find that its value drops faster than you’d expect. However, the long-term savings on fuel and maintenance could still make it a smart choice. Just be aware that EVs, like any car, will lose value over time.
The important thing to remember here is that EVs are no longer the novelty they once were. They’re entering the mainstream market, and with that comes increased competition, technological innovation, and a changing value curve. If you’re considering an EV purchase, think carefully about the long-term commitment—both financially and in terms of technology—and how quickly new advancements could make your car feel outdated.
