New data has found that electric cars lose as much as half of their value after just three years of ownership with EVs depreciating faster than conventional petrol models.
The research found that used electric car buyers benefit from the more affordable prices and lower running costs, but new EV owners lose out.
Auto Trader stated that drivers face “significant depreciation” on their purchase, by losing almost half of their value.
Data from December 2023 found that a new £50,000 petrol car would lose around £17,000 worth of value after three years or 30,000 miles.
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There is optimism that the price of electric cars will continue to fall
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In comparison, a new £50,000 electric car would expect to lose around £24,000 over the same period.
The Road to 2035 report said this showed “unsustainable levels of depreciation”, moving the used EV market forward instead of lowering the upfront costs of new cars.
Over 800,000 new electric cars were registered between 2020 and 2023 as analysts forecast that interest and demand for EVs will continue this year.
The value of used electric cars dropped massively in 2023 thanks to global supply chain issues beginning to ease and electricity prices stabilising.
The report added: “Persistently lower residual values on electric vehicles would also affect new car sales in 2024, as higher depreciation would be passed onto new electric car buyers through larger finance payments.
“With the new electric car market already slowing, and private buyers turning away from the fuel type, higher finance payments on new electric cars could be another headwind for consumers, unless manufacturers and retailers continue to incentivise the purchase of new electric cars.”
Manufacturers have launched new offers on electric vehicles with average discounts of 10.6 per cent in December 2023, compared to 4.8 per cent the year before.
There is optimism that the price of electric cars will continue to fall as manufacturers ramp up their production of electric cars, thanks in part to the Zero Emission Vehicle mandate.
The ZEV mandate requires car manufacturers to sell a minimum proportion of electric vehicles, with the 2024 target seeing brands have 22 per cent of sales be zero emission.
This will increase proportionally over the coming years, with EVs representing 80 per cent of sales in 2030 and 100 per cent of sales by 2035.
Many industry experts have forecast that Chinese brands will make significant strides into the UK and European markets this year, further lowering prices.
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China's BYD is looking to expand its reach in the UK market
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Brands like BYD and GWM already have a presence in the UK but are looking to establish themselves as the go-to option for affordable electric cars.
BYD - which stands for Build Your Dreams - already sells three models in the UK - the Atto 3, the Dolphin and the Seal.