The Depreciation Reality
Let's look at the numbers and understand how electric vehicle values hold up over time compared to traditional gas-powered cars.
EVs depreciate faster initially.
Recent data shows that, on average, an EV loses about 49% of its value over the first 5 years, compared to around 38.8% for a traditional internal combustion engine (ICE) vehicle. High depreciation hits luxury EVs the hardest. However, this trend isn't permanent and is driven by rapid technological advancements and recent market price cuts.
Source: iSeeCars 5-Year Depreciation Study (2023/2024).
Heavy early depreciation due to rebates.
A major factor driving extreme first-year depreciation is government incentives. In Canada, buyers can get up to $9,000 off a new EV between federal and provincial rebates. Because these rebates only apply to new purchases, a 1-year-old used EV immediately loses the value of those combined rebates. Buyers won't pay $40,000 for a used EV if they can buy a brand new one for an effective price of $36,000 after rebates.
Source: Automotive Market Research on EV Subsidy Impacts.
Tech improvements & price wars.
The smartphone effect applies to EVs. Because battery tech and charging speeds improve every year, older models look less attractive, driving their used prices down faster. Additionally, aggressive price cuts by market leaders like Tesla and government incentives on new purchases artificially lower the resale value of older un-subsidized models.
Source: Kelley Blue Book (KBB) & Black Book Auto Market Insights.
Used EVs are the ultimate bargain.
Because the depreciation curve is so steep early on, buying a 2 to 3-year-old EV is currently one of the smartest financial moves in the car market. You skip the initial massive value drop while still enjoying an 8-year/160,000 km battery warranty, almost zero maintenance costs, and a vehicle that costs pennies on the dollar to "fuel."
Source: Consumer Reports Used Car Buying Guide.
Market stabilization.
As battery technology plateaus and an EV going 500km becomes the accepted standard rather than the exception, the depreciation curve between EVs and gas cars is expected to flatten out and match. Long-term TCO (Total Cost of Ownership) still strongly favors EVs due to drastically lower operating and repair costs over a 10-year lifespan.
Source: JD Power EV Index & Long-Term TCO Projections.