The Depreciation of EVs vs Regular Cars

By Ursula Nizalowski

There are a lot of things to consider when buying a new car such as its cost, its condition, and its
value. Because like going to college, new cars are an investment that will have a long-term
effect on the driver. Overtime, though, cars will start to lose their value in a process called
depreciation. And since the car market is rapidly changing with more people starting to switch
from gas to electric, the depreciation of cars in general has also changed. So to get a grip on this
shifting economy, here is a rundown of what depreciation is and which type of car is affected
more by this process.

What is Depreciation?

According to Elmo , an electric car subscription company, “Depreciation is the difference
between what you paid for an asset (which in this case is the car) vs the amount you sell or trade
it in for”. In other words, depreciation is the value that is lost from how much the car was
initially purchased for and what it eventually sells for when the owner decides to get rid of it.
Now there are a lot of factors that affect the depreciation of a car’s value. For instance, if the car
has racked up a lot of miles then it won’t have much value because the next person who owns it
won’t be able to drive it for too long compared to a car that doesn’t have many miles. Other
factors include the reputation of the car’s brand, its service history, the size of the car, the level of
carbon emissions from the car, and the state of the economy in general.

Which Type of Car is More Valuable?

Electric – In recent years, electric vehicles (EVs) have become more affordable due to
improved battery life and government incentives that knock the initial price down a notch. But
they can still depreciate overtime with claiming “EV owners can expect 52 percent depreciation in the first three years” as quoted by . Plus, their overall value is decreased by the incentives and they’re not as in high demand compared to regular gas cars. Yet EVs have good resale value since they’re less prone to breaking down and the world is generally
moving in a more eco-friendly direction with “the UK Government banning the sales of new
petrol and diesel cars from 2030 onwards” Elmo says.

Gas – Since the 20th century, gas has been the staple energy source for motorized
vehicles of various sizes. Although the efficiency of gas depends on the type that’s used as
“diesel engines generally last longer, are more fuel efficient and are said to be more reliable”
than petrol cars as stated by Elmo . Additionally, gas cars depreciate at a lower rate than EVs in
three years by as much as 20 percent less due to their high demand. But with more
environmental awareness of carbon emissions resulting in scandals like ‘ dieselgate ,’ the value of
gas cars may decrease overtime. For instance, Drive Electric Colorado claims some internal
combustion engines (ICEs) “will increase in resale value due to their desirability while others
will depreciate faster”.

For more information on the depreciation of cars be they gas or electric-powered, feel free to
contact attorney Rick Wagner .