Electric cars may be great for saving money on gas, but a new report from Kelley Blue Book, commissioned by USA Today, shows that EVs might not be a great value option for their first owners. The study found that compared to gas-powered vehicles, EVs tend to lose significantly more of their value in the first five years of ownership, corroborating a study conducted in the UK, which we reported on earlier this month.

The new Chevrolet Spark EV, for example, will only be worth 28-percent of its $28,305 sticker price after it's been on the road for five years, compared to its conventionally powered counterpart's 40 percent value retention. It's a similar story with the Ford Focus Electric, which starts at $35,995. The EV variant will be worth 20 percent of that, while a gas-powered Focus Titanium should be worth 36 percent of its list price.

In fact, in KBB projections, the three cars with the highest level of depreciation use an electric motor and battery packs - the Nissan Leaf, Fiat 500e and Smart Fortwo Electric Drive. "Pure electrics have been slow to catch on in the resale market," Eric Ibara, directors of KBB's residual consulting, told USA Today. Customers are "willing to buy a new one, not a used electric vehicle."

Still, the study's results might not indicate a problem with the cars themselves. As USA Today points out, most EVs come with significant amounts of incentive money up front – many come with a $7,500 tax credit courtesy of Uncle Sam, in addition to any other government incentives (federal or otherwise) – while electric cars are traditionally available on very reasonable lease terms. These factors corroborate to hurt a car's long-term value.

What do you think? Would a big drop in a car's value over the first five years keep you from getting behind the wheel? Is a significant drop in resale value worth it, if it means not having to buy gas? Let us know what you think in Comments.


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  • 62 Comments
      NY EVO X MR GUY
      • 1 Year Ago
      We will see in 5 years wont we?
      Spec
      • 1 Year Ago
      The same misleading story gets repeated again. *Facepalm* The funny thing is when the same people who use the "We are just subsidizing rich people with EVs!" then go on to cite this as another reason why EVs are bad. This is proof that the subsidies help less wealthy people as well . . . when the used EVs hit the market, they are pre-discounted since they start at least $7500 below the cost of a new one (because who would buy a used when when you can get a new one with a $7500 tax-credit?!?!?).
      itsme38269
      • 1 Year Ago
      First, remove the tax credit from the starting price before considering that as part of depreciation, because it's not. Second, I very much doubt these projections are correct.
        Anderlan
        • 1 Year Ago
        @itsme38269
        Yes, first thing, they have to factor in the tax credit. The fact that they don't makes me dismiss this as anti-competitive and infuriating PR-driven FUD. But second, I have to say they are still correct. But because EVs started out more expensive. EVs become cheaper and get more features and improvements every year. So what kind of idiot is going to pay more for a used vehicle than he would pay for a new vehicle with more features?? The critics know EVs were expensive when they came out and that was part of their PR campaign against them. Now that prices are coming down they are using that against EVs. You can't win with determined liars. But the consumer still wins, despite this propaganda. http://i.imgur.com/itLCmMk.png
          Anderlan
          • 1 Year Ago
          @Anderlan
          Hmm, downvoted. I came off a little strong with the accusation of PR-influence by incumbent industry groups. But I stand with itsme38269 in asking Autoblog to dig deeper and tell us if the original study takes the tax incentives into consideration. If it doesn't, it looks a lot like a FUD job to me, sorry. The next point is also a good one; that is, the depreciation is an indicator of decreasing prices and increasing features every model year. That's good because EVs needed to come down in price and increase in capability, and they've done that.
      audisp0rta4
      • 1 Year Ago
      I'm getting an electric Focus in 5 years!! 8-10k for a well equipped daily driver is not a bad thing.
      BraveLil'Toaster
      • 1 Year Ago
      The moment you drive off the lot, it's already worth $7500 less than the sticker price. Who would buy a $38,000 car when you can get one brand new for $30,500? That's 20% off right there!
      Anderlan
      • 1 Year Ago
      When gas is low, super-high MPG car value is low. Ironically, only penetration of super-high MPG cars (or recession) deters oil speculators from bidding gas upward.
      Nick Kordich
      • 1 Year Ago
      "corroborating a study conducted in the UK, which we reported on earlier this month." Funny thing about that study: the lowest-priced listings for Nissan Leafs from the three largest online used auto sites in the UK (Autotrader, Parkers and eBay Motors UK) were almost double what CAP Automotive predicted. According to the ABG article, "EVs in the UK lose about 80 percent of their [pre-incentive] value within the first three years of ownership, while most cars lose somewhere between 60 and 70 percent." A base model Leaf that sold for £28,350 (£23,350 after incentive) in 2010 should sell for £5,670 in 2013. The lowest priced listing was £10,445 - a 37% residual value if you don't factor in the incentive and a 45% residual value if you do. Granted, that's a listing that hadn't yet sold at the time, and the owner may have payed more than the base price (though the options packages on the Leaf are fairly straightforward, and I was conscious of this possibility when running the numbers). It was also a very limited sampling of online listings. CAP presumably had a larger group to sample from, but we really don't know anything about their methodology. Obviously, some random queries by someone off the Internet (me) are not going to carry as much weight as the CAP Automotive Group. Perhaps not so obviously, I don't put any intrinsic value on "market research" company findings - in many cases, source and method of their research may be concealed, speculative or biased, if not fictional, and the market research "company" may be one or two people getting "research" off the Internet, with no more diligence than I am. However, CAP is a relatively large company for a market research firm, and I don't assume their facts are factitious. That leaves me with the question: how is CAP determining Leafs are selling for ~£6,000? Perhaps some of our UK commenters can chime in with whether that's the price they have seen on three-year old Leafs. My theory is that these do not reflect our ideas of normal ownership. By looking at three year old Nissan Leafs, they are disproportionately looking at vehicles coming off a fleet lease. While ICE vehicles may come off fleet leases, as well, there will be many more conventional sales of the varied kinds of ICE vehicles that dilute the effect. Another possible factor is that, although EVs are being sold with government incentives, ICEs may be suffering from an inflated list price - the actual transaction price is knocked down by manufacturer incentives and haggling with the dealer. While there is a dealer markup (which we've discussed ad nauseum), ICE vehicles do sell for an average price notably lower than their list price. When these cars were first introduced, possibly sold to people on a waiting list or institutions that were taking a lease at the full price, they're unlikely to have received much of a deal. I recall early Volt sales being over MSRP in the US. It may just be too soon to expect a predictive trend.
      samcrut
      • 1 Year Ago
      EVs are worth less down the road because the battery tech will keep getting better/cheaper in the new cars. Having an 80 mile battery pack is OK, but not ideal. Once they triple that capacity at the same price, I'll buy, but for now I'm leasing my Leaf. But I don't see mention of the resale value of the Teslas are holding quite well, because they have a more useful battery pack. If they allow EV drivers to sell off the current battery pack and upgrade to a higher capacity one, the value of the car will rise considerably.
        raktmn
        • 1 Year Ago
        @samcrut
        By the same logic, a gas car someone bought before the new CAFE regulations started kicking in will be worth less than once the CAFE regulations are in full effect.
        Neros
        • 1 Year Ago
        @samcrut
        Wrong. Factor in tax rebates and the residuals are nearly identical. In the real world EV residuals will be better than identical as charging stations continue to proliferate and EVs of course have a lower cost of ownership. Your comment would only apply if the market was saturated with EVs. Interest, sales, and production rates are growing.
      Avinash Machado
      • 1 Year Ago
      Statistics can be manipulated to say anything you like.
      Jameskey
      • 1 Year Ago
      I often wondered how the $7500 tax credit affects the resale value.
        Jameskey
        • 1 Year Ago
        @Jameskey
        I guess it's a good thing then, that Musk is personally guaranteeing Tesla resale value!
        cmcilroy35
        • 1 Year Ago
        @Jameskey
        See my comment above,, any credit to you is also instantly lost in value.
      cmcilroy35
      • 1 Year Ago
      The $7500 tax credit is instantly lost as depreciation.. For example, if you buy a $45k car w/ a $7500 tax credit you pay $37k, but you can't turn around and sell the car the next day for even $44k. Why would someone else buy your car when they could also buy a new one for $37k using the $7500 tax credit themselves. Any gains you *think* you may have gotten w/ the $7500 tax credit are instantly lost as the car depreciated an extra $7500 off of MSRP immediately. If there are any winners, it would be a subsidy for GM who's selling $45k cars for $37k... Hows that for your taxpayer money?
        2 wheeled menace
        • 1 Year Ago
        @cmcilroy35
        You win every day over electric cars because your oil is subsidized by monetary and non-monetary means.. When you go to the grocery store, you win because your grain products and meat is subsidized too. Are you mad about those things as well? Sounds like some highly selective anger you got goin' on there.. :)
        raktmn
        • 1 Year Ago
        @cmcilroy35
        cmcilroy -- You only "lose" that $7500 tax credit if you turn around and sell your car. Simply keeping your car longer until the $7500 dollar tax credit sunsets solves the entire problem. Whether you lose that money or not is entirely in your own hands. Enough whining already.
      John Hansen
      • 1 Year Ago
      The cheapest 2011 Volt with < 45k miles (3 years of avg 15k) on cars.com is $19,932. Given that I can walk into any Chevy dealership today and buy a brand new 2014 for $26,500 after tax credit, that means that the real depreciation is about $6568 (total) over three years. Extrapolate that out to five years (it would actually be less because the earlier years depreciate the most) and we can estimate that five year old Volts will sell for approximately $15,553, or 58% of their original cost, way more than the KBB estimate. Of course, KBB is probably not including the tax credit in the depreciation costs, but that makes their numbers completely bogus, because nobody has ever considered the price of an EV without considering the tax credit. Before anybody argues that not everybody can get the tax credit... if you can afford to buy a brand new vehicle, then it's very unlikely that you won't get the entire tax credit. In reality, EVs are clinging stubbornly to their resale value, which is somewhat of a problem for me, since I was hoping to buy a cheap used EV after my lease is up, but it doesn't seems like that will be the case.
        edward.stallings
        • 1 Year Ago
        @John Hansen
        A Volt is a hybrid, not an EV. The difference is that you can go anywhere roads will take you in a volt. EVs have a short leash that gets shorter with age and are not practical in most households.
        Anderlan
        • 1 Year Ago
        @John Hansen
        What's the buy-out price of your car (presuming it's a Volt)? The buy-out price of the LEAF leases have been rather spot-on when I've checked on them. LEAFs do seem to hold their value more than Volts, but that's just my perception because I guess they start out more expensive. (Justifiably since they are more versatile. If you *have* to have a 20+ mile plugin with generator on board and are unable or unwilling to do the 1-long-range-car-and-1-short-range-EV thing, then Volt is the only semi-affordable game in town at the moment.)
          Anderlan
          • 1 Year Ago
          @Anderlan
          I totally said that wrong. Got some negatives backwards. Just delete that comment. Arg.
        • 1 Year Ago
        @John Hansen
        [blocked]
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