Tesla and EV/Hybrid depreciation

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Tesla and EV/Hybrid depreciation

Post by onyxdragon »

https://www.topspeed.com/how-much-tesla ... r-5-years/
Aniebiet Inyang Ntui of topspeed.com wrote:
In the realm of automobiles, depreciation refers to the decrease in a vehicle's value over time. This depreciation occurs due to a combination of factors, including wear and tear, technological advancements, and changes in market demand.

Depreciation is a significant consideration as it can substantially impact the resale value of your vehicle. Tesla, the automaker synonymous with electric vehicles (EVs), has captured the attention of the automotive world with its sleek designs, cutting-edge technology, and impressive performance.

However, despite the undeniable appeal of Tesla models, they often face higher depreciation rates compared to their counterparts. To shed light on the general depreciation landscape, a study by iSeeCars delved into a comprehensive analysis of depreciation data encompassing over 1.1 million vehicles sold within the United States between November 2022 and October 2023, and here are the findings.

The Depreciation Rate Of Teslas Is Quite High

The iSeeCars study unveils insightful trends into the depreciation rates of Tesla's Model S, Model X, and Model 3. Among these, the Tesla Model S emerges as one of the luxury vehicles experiencing the most significant five-year depreciation, with its market value plummeting by a substantial 55.5-percent.

The Model S ranked 19th in the "Top 25 Vehicles With the Highest 5-Year Depreciation" category and fifth (the lowest ranking position) in the "Ranking of EVs by 5-Year Depreciation" category. This depreciation figure raises concerns for potential buyers considering a resale or trade-in after five years, highlighting the importance of comprehending the long-term financial implications of owning a Model S.

Ranking Of EVs By 5-Year Depreciation


Average 5-year Depreciation

1 Tesla Model 3: 42.9-percent

2 Tesla Model X: 49.9-percent

3 Nissan LEAF: 50.8-percent

4 Chevrolet Bolt EV: 51.1-percent

5 Tesla Model S: 55.5-percent

EV Average: 49.1-percent

(Data sourced from iSeeCars)

Tesla's Luxury SUV Also Depreciates

Tesla's Model X luxury SUV depreciates by 49.9-percent over the same period, ranking third among the top five EVs in terms of five-year depreciation. While not as severe as the Model S's depreciation, this percentage still places the Model X among electric vehicles (EVs) facing significant value loss over the first five years of ownership.

The Budget-Friendly Tesla Has The Lowest Depreciation Rate

In contrast, the more affordable Tesla Model 3 experiences a 42.9-percent depreciation after five years. While this is relatively better than its higher-end counterparts, it's worth noting that the Model 3's depreciation remains higher than the average for all vehicle types. The 5-year depreciation rate of the Model 3, though lower compared to the Model S and Model X, prompts potential buyers to weigh the long-term value retention of this entry-level Tesla.

Tesla Is Not Alone, EVs Have The Worst Depreciation Rate

Electric vehicles (EVs) have the worst depreciation across major vehicle types, losing an average of 49.1 percent of their value after five years. This is more than 10 percentage points worse than the average depreciation for all vehicles, which is 38.8 percent.

5-Year Depreciation For Notable Segments

2023 2019 Improvement Since 2019

Overall: 38.8-percent 49.6-percent 10.8-percent

Hybrids 37.4-percent 56.7-percent 19.3-percent

EVs 49.1-percent 67.1-percent 18.0-percent

SUVs 41.2-percent 51.6-percent 10.4-percent

Trucks 34.8-percent 42.7-percent 7.9-percent

(Data sourced from iSeeCars)

Electric vehicles (EVs) have taken the automotive world by storm, revolutionizing transportation with their promise of zero tailpipe emissions and enhanced performance. One of the primary reasons for higher EV depreciation lies in the relative novelty of the technology.

EVs are still undergoing significant advancements, with new battery chemistries, charging infrastructure, and vehicle designs emerging rapidly. This constant evolution can lead to a perception of obsolescence among potential buyers, who may be hesitant to purchase an EV that could be outdated in just a few years.

Battery Degradation And Replacement Concerns

The heart of any EV is its battery, and battery degradation is a major factor influencing depreciation. While EV batteries have improved significantly in recent years, they still experience gradual capacity loss over time, affecting the vehicle's range and overall performance. The potential for costly battery replacements can further deter buyers, contributing to higher depreciation rates.

Impact Of Incentives On Initial Pricing

Governments around the world have implemented various incentives to promote EV adoption, often in the form of tax credits or rebates. These incentives can significantly lower the upfront cost of purchasing an EV, but they also tend to artificially inflate the initial vehicle price. As a result, when these incentives expire or are reduced, the market value of EVs may not hold up as well as that of gasoline-powered vehicles.

The Implications If You Are Buying Or Selling An EV

The rapid depreciation of electric vehicles (EVs) carries multifaceted implications for both buyers and sellers in the automotive market. Before you buy an EV, it's important to consider how much its value might drop over time. Take note of how much you'll get when you sell the car. So, before you sign on the dotted line, make sure you factor in expected depreciation costs.

You might also want to consider buying a used EV. Used EVs typically have lower depreciation rates than new ones, so you could save some money. But be sure to inspect any used EV carefully before you buy it to make sure it's in good working order.

Depreciation Will Make It Harder For You To Sell Your EV

If you're selling a used EV, you might find it harder to get a good price than you would for a used gas-powered car. This is because EVs depreciate more quickly, and there's not as much demand for them. But don't despair! You may be able to get a better price if you sell your EV to a private buyer instead of a dealership. Private buyers are often willing to pay more for used EVs than dealerships.

The Pandemic Influenced Depreciation

The study by iSeeCars also acknowledges the pandemic's influence on the automotive market. Reduced new car production during the pandemic and constrained used car supply have resulted in overall improved value retention for all vehicles. The average 5-year depreciation has decreased to 38.8-percent, down from 49.6-percent in 2019.

Impacts of the Pandemic

Reduced new car production: Disruptions to manufacturing and supply chains caused by the pandemic led to a significant decrease in new car production. This constrained supply of new vehicles rippled through the automotive market, affecting both new and used car inventories.

Increased demand for used cars: The pandemic's impact on consumer spending and travel habits caused many individuals to shift their preferences towards used cars. Used cars offered a more affordable and flexible transportation option, particularly in the face of economic uncertainty. This increased demand for used cars further supported higher value retention for both EVs and gasoline-powered vehicles.

Extended vehicle ownership: The pandemic also led to an extension of vehicle ownership cycles. With individuals spending more time at home and driving less frequently, the need to replace vehicles with newer models diminished. This trend contributed to further improvement in value retention for both EV and gasoline-powered vehicles.

In conclusion, the depreciation landscape for Tesla's Model S, Model X, and Model 3 reveals a noteworthy trend, indicating higher rates compared to some traditional counterparts. While the allure of cutting-edge technology and sleek designs defines Tesla's appeal, prospective buyers must weigh the potential challenges in value retention over time.

As electric vehicles (EVs) gain prominence, factors like battery concerns, government incentives, and the pandemic's impact further shape the intricate dynamics of vehicle depreciation. Navigating this landscape requires careful consideration of individual preferences, usage patterns, and long-term financial implications.

Ultimately, as the automotive industry continues to evolve, the future holds promise for addressing and potentially mitigating the challenges associated with EV depreciation.
Onyx Dragon
1999 Jeep Cherokee Sport, 2021 Jeep Wrangler Islander, 2001 Pontiac Firebird Trans Am
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