There is also a risk in buying an ICE now. They are being phased out and banned from city centres, which may well push down second hand values.

There are two ways of avoiding/reducing risk, for both ICE and EV:

1. Buy the car (ICE or EV) and keep it for the long term - say 100,000 miles or ten years. It will be worth little then whatever happens. If you do this, you only have to check that the EV you buy is cost effective now. Remember that you save about 10p per mile in fueling costs (as well as no road tax and maintenance) - say you can pay £5,000 to £10,000 more that then equivalent ICE up front, which justifies the premium. You are can think of it as paying for fuel up front.

2. Lease the car, in which case the costs are fixed. The lessor has to worry about the final value.

However, we bought a battery-owned Zoe ZE40 for £17,500 in 2017 and it looks as though we could sell it for between £13,500 and £15,500 today, so the lowest depreciation on a new car I've ever had. Personally, I think the low running costs are going to keep second-hand prices quite high - I may be wrong.

 

Thanks for that ... we have a tatty ICE that wont last forever but we have had solar panels for ages so been waiting to the sweet point where range is decent and the deals are still on ...... first generation cars might be over engineered and potentially a "bargain"

 

Not at all
a) EV's are what they are, is it premium? or is it because you're comparing them to ICEs?
b) This happens with most things - as long as it continues to work

I buy a thing, i don't care what the depreciation is.
If want it & can afford it, i buy it, if not then i don't buy it - simples

 

This is the question we all ask ourselves and there are no easy answers. There are of course EVs that I personally would avoid - an example being the Smart car- too expensive with a tiny battery.
However, my starting point is to assume that all new cars depreciate. If you buy a Jag or a Merc or a BMW they will be worth less than 50% in 3 years time of what you paid. You will obviously see your total loss less in a small, cheap car.
So the issue is will you see a higher depreciation on an EV v a petrol or diesel? The answer is unlikely. At present due to waiting times prices have been holding up well. But in certain segments there is more competition now so I would expect them depreciate ( small hatchbacks like Zoe, e-208, e-Corsa etc) but no more than petrol or diesel equivalents.
There is also a £3,500 grant towards the cost at present.
My Kia eNiro cost c£34k including grant. Do I expect it to depreciate - yes. I had worked on the basis of it being worth about £15k in three years. However, the price has gone up and if they remove the grant it may be worth more if I decide to sell.
Am I worried about batteries getting more efficient/ costing less - no. I can do all the journeys I want with very rarely using a rapid charger. It costs me about £8 to do between 200 and 250 miles (depending on weather, speed etc). I don’t pay road tax and it costs me £250 for 3 years to service. My previous diesel car depreciated by 55% in three years and cost considerably more to service, tax and fuel.
I didn’t buy my EV to avoid depreciation or to save money but because I wanted to pollute less. I am saving money on running cost (I have solar panels) and if my car is worth more than I expected when I come to sell that will be a bonus. But I might keep it for several years as it is great to drive and meets our family needs in terms of space , convenience etc But as always only you can work out what best suits you.

 

I guess I can lease if I am worried about that 3year market moving ... but reading this ... maybe I am better off paying the PCP off early and financing it myself using my flexible mortgage confident in residuals ...yours an indecisive libran !

 

Indecisive - you and me. My wife needs a new car (subject to a separate thread) and we are struggling if it makes sense to buy a small EV on both cost and environmental grounds. Good luck with whatever decision you make. Certainly driving an EV is a joy, especially if you are making use of your own electricity.

 

b) within 3 years the tech/batteries move on and my premium car is now falling like a stone

Hmm. Unlikely I think. There has been a steady, incremental improvement in lithium batteries for quite a while and there's no obvious sign of that changing soon.
There are a few possible game-changing battery technologies being developed, but they may come to nought and if they do succeed it will be more than 3 years before they become mainstream. Car production just doesn't move that fast.

I think the biggest 'risk' is really that battery prices may drop dramatically over the next few years thus dropping new car prices substantially. That will obviously affect second-hand values.

 

Well I jumped on the solar panel FIT in ~2010 and paid strong money for panels that are much cheaper now .. but the FIT was worth it so have a little bit of experience in that exact risk !

 

Did the opposite. got in close to the end of FIT in Feb 2019, 4.2kw system using 14 Italian made 300w panels and high end SolarEdge HD wave tech, £6k , fit is 6p kwh with 50% assumed export. Doing better than that as am currently averaging using 60% of all we generate so only 40% real export.

 

I think the main risk at the moment is around battery capacities, with newer models with higher capacities being released causing an acceleration in depreciation of the older, lower capacity models as it makes them less desirable by comparison. Compare a 2017 Leaf with a 24 or 30kWh battery to a 2018 model Leaf with a 40kwh battery, there's a big difference in price for 1 extra year of age.

But as someone who buys cars to keep, rather than churn them every 3 years, I'm rather hoping the depreciation will increase to make the economics of used EV ownership more attractive. But even if it doesn't there's now a steady flow of 40+kWh models moving through the pipeline that affordable, <£15k used models will be appearing in a year or two.

 

With technology moving quickly in this section my fear right now if I buy an EV is....

a) EV's are at a premium
b) within 3 years the tech/batteries move on and my premium car is now falling like a stone


With ICE cars we new early years had high depreciation as well .. but are EV's worse given game changing tech ?

Buy a new Tesla Model 3 SR+, finance over 8 years battery warranty. Tesla are 10 years ahead of everyone else. Buy the time your Tesla is paid for and virtually "free" to own, BMW and merc will have just released their 250 mile range 3 series and C class, which you had 8 years ago.

Job done.

 

I wouldn't swap fuel/road tax savings for finance in a million years, lol. Life is better/simpler without loans, credit cards and contracts hanging over your head

 

I personally don't factor it in.

I expect to loose a ton of money on any car, its just how it works. Anyone who sells a car as an investment shouldn't be trusted!!!

 

Better cars will cause depreciation in less capable ones but demand for second hand
EVS may counter that anyway. Add into the mix supply issues with China and currency movements making prices vary or different tariff regimes and it's even more complicated. Finance availability and cost adds more randomness in. If worldwide car supply becomes constrained permanently then all bets are off.

 

Nearly impossible to predict, but I agree that any notion of massive changes in the next 3yrs seems unlikely.

Personally I just do the only things I can do to limit the amount I pay in depreciation. Buy used and scour the market trying to buy a good example at the lowest possible price. I can't do much about what it's worth when I come to sell it, so paying as little as possible is about all I can do! So far after 12months it's worked in my favour. Suspect I could still sell it for more than I paid. Interesting to see what the market looks like in the next 12months...

Leasing can work out cheaper, but only relative to buying brand new (usually without the best discount) and then trading in at market value after a short period of time/mileage. A buying behaviour I never prohibit, so its still not an answer for me personally...

 

I hope they depreciate like crazy,more chance of getting a discount off the PCP. GFV figure if its too high and you want to keep the car.

 

According to a recent news blog, the Tesla M3 was the slowest depreciating car last year - just 5%

 

Not sure what that was based on - how many second hand Model 3s were on the market when deliveries started in March?

Also, they tend to use the RRP when calculating depreciation. Most of the other OEMs provide large discounts or dealer PCP contributions.

 

It’s a gamble but it is not a given that price will inevitably come down and capacity (energy density) increase. Progress seems to have plateaued a bit and lithium battery prices haven’t always dropped; both lithium and cobalt rely on cheap mining which may not continue with concerns about environmental impact and exploitation of labour. The so called “solid state“ battery has been promised for several years without any real breakthrough. At present it seems like gradual improvement over several years and the sometimes quoted cost equivalence (with ICEs) by 2023 seems highly speculative to me.

 

I thought the i3 60Ah ReX 2014 would be a money pit of depreciation. Turns out it was worth 4K more than expected after 4 years (even with the lovely people at BMW) and, according to some estimates, appreciated by 1% during it's 4th year with us. The concerns about tech improvements and price reductions raised by the OP felt much more urgent 4 years ago but. Given ours was an only car we had to get something practical that would be partly future-proofed (ReX made the limited EV range unimportant) which probably helped - nothings changed now.

Buy a useful car and it will be in demand to a 2nd or 3rd owner down the line. If money is the main concern than as others have said don't buy a new one. Buying 1-2 years old with low mileage and run for 4-8 years has served us pretty well (the ol' Skoda Roomster that broke its front steering after 7 years was probably not the best example though...)

It's easy to think that one must have 200 mile range to have value in 5 years time and this may well be true and where to focus for those with one car only. However.... ~120+ is more than enough for a second car and I see no change in the future about people wanting to run two of the blighters given the current government's transport policy, if one can call it a policy (i.e. perhaps there's still likely to be a big market even when 250 mile+ is common in 1-2 year old cars).

Supply is well behind demand already and it seems as though demand isn't stopping soon (even Top Gear were drooling over an EV last weekend).

SnC

 

Supply is well behind demand already and it seems as though demand isn't stopping soon (even Top Gear were drooling over an EV last weekend).

James May bought an i3 in 2014 and he also owns a Tesla S. Clearly, the present team have a bit of catching up to do.

 

I have never overly worried about depreciation. I of course consider it when purchasing a car but I just see it as a part of the cost that needs to be paid for the use and benefits of the car in question . What value do I put on the ability to go where I want when I want transporting who I want and what I want? I can't be bothered to work it out, I just enjoy the benefits and pleasure that it gives me.

How many of us go out for a nice meal in a restaurant and next day wonder what it's now worth?

 

It would be wrong to say nobody cares about depreciation.
It is inevitable and EV at the moment being quite expensive will lose more than a cheaper ICE equivalent.
Will it be worth nothing, unlikely.
Will it be worth lots, unlikely.
For me, it would be about how much fun I will get for that money.
Excitement about driving a more powerful car than I had before
Excitement of moving to a 2 pedal car, from a manual ICE
Excitement about all the ways I'm going to try and recoup the potential energy, coasting, regen, etc
Excitement on the challenge whether I will be able to to do a long journey given the current charging infrastructure
Excitement that I have joined the group attempting to save the planet
So, instead of spending thousands playing golf, fishing, skiing, this is just one way to have some fun
Oh, it will get me to work and back, but that was the lowest on my list

 

The way I see it is:
If I rent a car from any car rental it would cost me around £500 / month this means that after 7 years I wold have spend as much as the car I bought.
So if I keep the car for more than that, any money I get for it is profit.
Depreciation is the dealers' favourite word...

 

Think of it this way, your depreciation is a car dealers profit - so stop worrying about it, waste lots of money on buying the cars you want to own, and keep loads of younger than you idiots in a job

 

I've always had cheap cars that I keep so depreciation has never been a worry for me, and I've never had a loan for one. To get an EV that gets towards meeting my needs I'm going to have to spend a lot more than I've ever done before, so depreciation has become a leetle more important to me.

I have had a look at the leasing prices, but they're difficult to make head or tail of at the moment. Some seem incredibly good value given the list price of the car: so £260 (inclusive) a month on a Leaf over 24 months where the full list price is £30k+. Buying you'd be paying that 260 a month for nearly 10 years if you were to pay full list.

Then you have ridiculously high prices for 28kWh Ioniqs compared with the newer larger battery models (why advertise the old model at all?), and they're cheaper than little cars like the eUP and Citigo.

The problem is the relative scarcity and high price in my preferred second hand market. What will happen to the prices of the ex-PCP/PCH cars after two years? Will some of the leasing firms go pop, are they really making such good deals with the manufacturers or are they making really accurate or optimistic forecasts of future values?

I'm ready to make the jump if somebody rear ends my car at some traffic lights and it's a write off, but in the meantime think I'll wait just a little longer..

 

Yes I sympathise as it still feels we are in the “early adopter” phase and nobody wants to risk more of their hard earned cash than necessary. We have one EV which we really like but are not certain about risking buying another one yet. If as it seems you are doing all your research and you are still not sure then my advice would be delay the decision. Most EVs are overpriced and it is taking a bit longer than most of us hoped for prices to fall.

 

Depreciation is inevitable ICE or EV. You can always minimise the loss buying pre-reg or near new. Used one might depreciated at a slower rate. PCP or Leasing is just paying the depreciation in a different form.

 

The point is though @BabyEVDriver, you're obviously one of the many people on here that do high mileage - and guess what, it pays for you to have an EV, which is great because it means you, as one of the potential larger emissions producer (!) have swapped. Unfortunately, the rest of us that would like an EV, but don't spend loads on ICE fuel, are faced with having to buy either crappy, or in someway flawed, and definitely low range, cars that in reality we don't really want, and the fact that because we've all gone anti-ICE, the deals on some exceedingly good ICE cars are very very tempting. Our decision is in fact a lot harder than yours.

 

Our decision is in fact a lot harder than yours.

Yep, this absolutely, and I am indeed delaying my decision as I still can't quite get the nerve to jump for a lease car, although maybe have one for a couple of years and then review the SH market would be an option.

But to expand on your point, a SH Zoe would be fine for most of my usage but not with a battery lease which would cost more than my current fuel bills. My solar panels are pumping it out today but no good if I have fixed costs that one can't do anything about.

 

Ok, for all those saying depreciation isn't a problem with EVs - the cheapest EV on autotrader, sort of, not including twizys, at the moment is £5k - for a 2011 either knackered leaf gen 1 or an ion. So explain to me why we've just been given a PeX value on a 66 reg Zoe Dynamic Nav with 17" alloys, of £5.5k. Profiteering, huge depreciation, explanations on a postcard to "The whole EV myths" dept, .gov.uk

 

So explain to me why we've just been given a PeX value on a 66 reg Zoe Dynamic Nav with 17" alloys, of £5.5k

There isn't one fixed price for what a car will sell for. You need to get quotes for a lot of different dealers, garages and online valuation companies.

Part exchanging only muddies the water even further, as they can offer you a lower or higher P/X figure depending on the discount they offer on the new car.
I always advise people to separate out the two. Get the best possible valuation on the car you are selling, and bench that around what you would sell it privately (around £1-2k lower than what dealers typically price them at generally).

I'm guessing it's a 22kWh lease Zoe? They fetch around £8-9k from dealers, so I would expect a bit better price wise. If it's a 41kWh then the dealer is really pulling a fast one!