The car valuation experts at Glass’s Guide have warned that, unless manufacturers take action soon, electric cars will suffer horrendous depreciation on the used market.
“If cars and batteries are sold rather than leased, and no special warranty cover is in place, the typical EV will retain only 10 per cent of its value after five years,” warns Andy Carroll, managing director of Glass’s.
This, says Carroll, is a function of the recognition that a typical EV battery will have a useful life of eight years and cost £8000 to replace.
By Glass’s reckoning, Nissan’s Leaf — available next year at around £23,350 — will be worth less than £3000 at five years old. That would make its purchase hard to justify next to a conventional car, which would be worth at least 25 per cent of its value at the same age.
As well as a purchase option, Nissan will offer a lease option to UK buyers which could avoid the depreciation issue, but it has yet to announce details.
However, take batteries out of the ownership equation, for example as Renault suggests via a £100-a-month lease scheme, and the costs could be offset against savings in petrol or diesel.
That way, Glass’s say, EVs could become the best-performing cars on the road in terms of residual value.
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Symanski
Re: EVs 'worthless within 5 years'
Don't forget that the EV will probably be twice the price of a standard car. So 10% residual value will be close to the 25% of a standard car.
Vidge 123
Re: EVs 'worthless within 5 years'
Thats not really the point! you would still be loosing 90% of the initial out lay. regardless if the car is still worth 2.5k!
Walking
Re: EVs 'worthless within 5 years'
It will be interesting to watch how the price per mile converge with rising costs of running a petrol and diesel engined vehicle including taxation. I guess the price of electric per mile including tax would rise more slowly than petrol or diesel. We all know that high Co2 cars depreciate in a big way it wouldn't take much of a change in pollution taxation policy and rising fuel cost to change the whole equation again.
Symanski
Re: EVs 'worthless within 5 years'
I should clarify that I was thinking that if you were to buy one used at that point then you'd be faced with two cars with similar prices. However, as everybody has pointed out a 90% loss is one seriously big hit!
As for leasing the batteries, it seems like a good idea when the car is new, but will kill residual values later on. I'd expect it to be similar to how cars with high insurance costs are cheap later in their life because you know you'll be paying so much just to put the car on the road!
catnip
Re: EVs 'worthless within 5 years'
[quote phenergn] I'm not down on electric cars, I think the technology needs to be explored. [/quote]
I agree with this, and I think the present government should abandon the proposed £5000 allowance for people buying these cars. We can ill afford it, and it will be encouraging people to buy what is essentially an under-developed product, one which may cost them dearly in the long run.
sierra
Re: EVs 'worthless within 5 years'
The "car" illustrating this article would probably be worthless the day it left the showroom
jer
Re: EVs 'worthless within 5 years'
Worthlesss : maybe maybe not. Depends on how the price and tech of batteries evolves in the 8 years. One might expect they would become cheaper or improved. I'd also like to know if the 8 year life is variable depedant on use and type of use. To me the bigger risk is early adoption vs development curve and risk of obselesence. Either way a hedge would be prudent via a lease from a mfer (if it does go wrong who will bail them out again?)
jjenal
Re: EVs 'worthless within 5 years'
The odd thing about this estimate is that it ignores the actual value of existing EVs. Cannot say what that's like in the UK, but here in California, the existing EVs from the previous generation (RAV4's for example) are in great demand because many people wish they could have bought one 10 years ago. There is substantial pent-up demand for "real cars" that are EV or PHEV (*not* by-the-way the neighborhood vehicle shown in the article) and the batteries are much better than they were in the RAV4 days. The article assumes that the cost of batteries will remain constant over the next 5 years - a very poor assumption as the number of these cars being sold ramps up. (Nissan is building a battery plant here in the US to support its Leaf fleet.) What one saves by not purchasing expensive gasoline for the next 5 years goes a long way toward covering the battery replacement cost down the road. If gasoline (petrol?) is ever priced to fully cover its cost - GHG emissions, massive environmental disasters wherever it is acquired or transported, military to secure access to supply, etc - EVs will be a no brainer for everyone. (All of those costs are real, just not tied directly to the user of gasoline.) "Fuel" them by using renewables, and you complete the circle. Cheers!
Los Angeles
Re: EVs 'worthless within 5 years'
[quote Autocar]The car valuation experts at Glass’s Guide have warned that electric cars will suffer horrendous depreciation on the used market.[/quote]Worse, alarmist propaganda about EVs will suffer horrendous depreciation after only three days on the Internet. An unnamed car reviewer opined he didn't mind so long as it happened to "That French rubbish" and not to British EVs. "If nobody volunteers to keep such threads alive indefinitely a typical "EVs are junk" topic will lose all value in a matter of hours" added a panic stricken Internet administrator. "There are not enough interested bloggers to keep the topic inflated," said a car mad lad. "It's pitiful."
FriendlyFisherman
Re: EVs 'worthless within 5 years'
5 years? EV's are worthless now..
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