Did you know that the government of the United Kingdom plans on banning all petrol-powered vehicles by the year 2035? While this is an excellent step towards combatting the effects of climate change, such a move also poses a slight concern for the car owners themselves.
This comes in the form of depreciation. In other words, those who plan on purchasing an electric vehicle (EV) in the coming years should understand how much its value could fall over time. Let’s take a look at how EV depreciation stacks up against traditional petrol vehicles as well as some other factors worth highlighting.
How exactly is the depreciation of a vehicle calculated?
We are all aware that new vehicles are more expensive than used models. This results from a phenomenon known as depreciation. What factors determine how much value your car will lose over time? We will examine some common variables before moving on to examine whether or not EV owners need to be concerned about depreciation in the future.
Some metrics associated with a loss in value include common wear and tear, if the vehicle is properly maintained, mileage, the brand, and the purpose of the unit in question. So, how might these apply to the new line of electric vehicles that will be entering into the future marketplace?
Will electric vehicles depreciate faster?
Electric vehicles are touted for their efficiency and for the simple fact that they will not produce harmful greenhouse gas emissions. Let’s also remember that the associated technology is continuing to evolve at a breakneck pace. These benefits are undeniable and they will continue to transform the entire transportation sector. However, such features might also come at a cost.
Recent studies have shown that electric vehicles will lose approximately 49.1 per cent of their value over five years. The main reason behind this somewhat surprising observation involves the cost of EV batteries.
EV batteries are rather expensive and replacements are a major concern amongst manufacturers and consumers alike. Purchasing a new unit costs well into the thousands of pounds and for this reason, the resale value of the vehicle in question naturally drops over time. Petrol cars and hybrids will not normally experience such a steep fall in value although once again, this can also depend on the variables mentioned earlier (such as the brand and if the unit was regularly maintained).
Will electric vehicles depreciate less as technology evolves?
While thsee observations may appear disturbing at fist glance, they might not represent the entire picture. One important point to mention involves the fact that regularly charging batteries with the help of a modern electric car charging cable will help to ensure higher level of efficiency while prolonging their lifespan. Analysts also predict that future EV batteries could last for up to 20 years before they need to be replaced. If technology continues to advance, this should limit the rate at which a car loses its value.
The (Electric) Wave of the future
Depreciation is a concern with any vehicle and this is just as relevant within the EV market. Still, there is little doubt that electric vehicles will eventually replace their petrol-powered counterparts. Manufacturers are therefor keen to ensure that they represent valuable long-term investments as opposed to a financial risk to consumers.
