Data from the Australian Automotive Dealer Association (AADA) and AutoGrab revealed a 2024 electric vehicle only held 78.2 per cent of its value on the second-hand market. That’s drastically lower than the 94.3 per cent margin held by internal combustion engine (ICE) cars of the same year.
Cox Automotive found EVs values drop to around 55 to 60 per cent of the original price tag after three to four years, while ICE vehicles hold a resale value of 75 to 80 per cent.
CarExpert.com.au founder Paul Maric told Yahoo Finance EV owners should even upgrade their car every two years to ensure they don’t lose too much value on their investment.
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“Once you get to the point of three or four years old, you’re getting to the end of the new car warranty and you’re halfway through the battery warranty.
“No one really knows what’s going to happen in 10 years after an EV is produced. You don’t know the cost of having to replace a battery.”
He pointed to the Nissan LEAF, the world’s first mass market electric and zero-emission vehicle.
While some of the earlier generations of the vehicle were able to go up to 200 kilometres on a single charge, he cautioned that an older version might have a significantly shorter range before it needed to be recharged because of how the batteries degrade over time.
“Two years is that sweet spot and means that you can manage your depreciation effectively,” Maric said.
“If you are holding on to it longer, you just need to be prepared for a lot of volatility, a lot of volatility in that market.”
Tesla has slashed the price tag on its Model Y by $16,000 over the last few years, with the Rear-Wheel Drive version now costing just $58,900.
It was the most purchased EV in Australia for the first half of this year and one of the most popular year-on-year.
But if that car wound up on the second-hand market by the end of the decade, it might only be able to fetch around $32,395, according to the lower end of Cox’s analysis. That equates to a $26,505 drop in value.
Under the AADA analysis, that Model Y could lose as much as $12,840 of its value in just one year.
“Used EV prices have dropped faster than the rest of the market, which isn’t surprising given the big discounts now being offered on new models,” AADA CEO James Voortman said.
“We’re seeing those price cuts flow through to the second-hand market, so buyers are getting better value but sellers are facing steeper depreciation.”
“Higher depreciation doesn’t just impact private owners, it flows through to trade-in values, dealer margins and fleet replacement costs, all of which shape how quickly EV adoption grows.”
It would be even more brutal for those who bought before the car manufacturer started slashing its prices in late 2022.
“If you were someone like me who took out a novated lease on a Model Y at $70,000,” Maric told Yahoo Finance. “That three or four-year lease is about to come up to its expiry, and I now have to pay a balloon payment on that car, which is the residual payout amount for the car.
“We’re at the point now where the balloon that I’m paying is more than what the car is worth on the second-hand market. So now it’s basically a fire sale.”
Tesla has taken a hit to sales this year but still dominates the EV market. (Source: Reuters) ·REUTERS / Reuters
The huge plummet in resale value is largely down to how fast EVs have been able to outdo their predecessors in the defining component of the car: the battery.
It seems like every year, manufacturers reveal they have discovered a new technique that allows their vehicles to go further on a single charge, which aims to reduce range anxiety that concerns many owners and potential buyers.
ICE cars, by comparison, have very little change in their petrol or diesel range, and the main updates year-to-year is how the vehicle looks and drives.
If an EV in Australia can go an extra 100 kilometres compared to one from two years ago, that latter one might not be as popular amongst second-hand buyers who want the best bang for their buck.
New data from Swinburne University has revealed that many Aussies are still reluctant to jump on the EV bandwagon.
Even though there are dozens of brands and models to choose from, and that it can be cheaper to run than a traditional ICE vehicle, only one in 10 buyers are considering getting an electric vehicle in the next two years, according to the data.
Swinburne’s professor of future urban mobility, Hussein Dia, said these findings will be concerning for policy makers who are keen on seeing more environmentally sustainable cars on Aussie roads.
“Australia’s goal of halving transport emissions by 2035 relies on rapidly scaling up EV uptake, yet most drivers still see EVs as too costly or inconvenient,” he said.
