The EV depreciation dilemma

Value depreciation is an important factor to consider when buying a vehicle, but it’s often overlooked by many buyers. Recently, electric vehicles (EVs) have become a popular alternative to cars with internal combustion engines (ICEs) for a range of reasons, including lower household costs thanks to charging a car over refuelling. But how well do they retain their value after years of use? 

Using second-hand price data across Australia, the energy team at iSelect decided to look at which EVs decrease in value the fastest. From expensive retail prices to low resale prices, these cars could end up losing you money in the long term when you’re ready to sell. Here’s what we found about the price depreciation of electric cars compared to cars with internal combustion engines.   

How quickly do EVs depreciate in value? 

To measure how fast electric vehicles lose their value, we compared the price of a new model to a second-hand three-year-old model. The decrease in price shows just how much the vehicle has lost its value in a three-year period. 

On average, EVs depreciated at a rate of 46.77% over the course of three years. This means they lost their value slightly slower than internal combustion engine vehicles, which typically dropped by 50.49% in the same period. The rate at which EVs lose their value can vary, however, our data analysis showed that while some remain at high prices, others can drop as much as 60% in value. 

For example, the Tesla Model 3 was marked as the most common used EV for sale after three years, according to our data. Despite this, its value depreciated by a remarkable 58.29% on average. 

With that in mind, which electric vehicles are the most prone to losing value? 

The five EVs with the highest rate of value depreciation 

These five models had the biggest value depreciation of any EVs we researched over the course of three years: 

1. Volvo C40

The Volvo C40 experienced a value depreciation of 60.71% in just three years, making it one of the EV’s on our list that lost significant value over time. Compared to a median cost of $114,515 AUD in 2022, a second-hand model can cost as little as $44,990 AUD, meaning its value has more than halved in a short period of time. 

2. Audi E-Tron

With a median retail cost of $171,979 AUD (as of 2022), the Audi E-Tron had the highest initial value of any EV in our top five. However, second-hand models can sell for just $69,990 AUD after three years of use. With a 59.30% decrease in price, it has depreciated just slightly slower than a Volvo C40. 

3. BMW iX3

The BMW iX3 is one of the manufacturer’s most popular EVs, but with depreciation rates of around 59.14%, the second-hand models in our data were much more affordable than the retail price. Instead of paying $130,820 AUD on average for a new iX3, a pre-used model can sell for $53,459 AUD after three years on the road. 

4. Tesla Model 3

When we think of electric cars, Tesla is likely one of the first names to come up. However, the Model 3 isn’t immune to the effects of value depreciation. Despite a median cost of $102,979 AUD in 2022, second-hand options can be bought for as little as $42,955 AUD, meaning their value has depreciated by 58.29% in three years. 

5. BYD Atto

With an average initial asking price of $79,732 AUD, the BYD Atto was a more affordable option than many of the EVs on our list in 2022. However, it still experienced high rates of depreciation, with second-hand models now selling for just $33,301 AUD on average. This means the average Atto lost 58.23% of its value over the course of three years. 

The five ICE vehicles with the highest rate of value depreciation 

It’s not just EVs that are prone to value depreciation. These are the five internal combustion engine models that lose the most value in a similar timeframe:  

1. BMW 5 Series

In 2022, the median price of a BMW 5 Series was $235,242 AUD. Now, three years later, the same models are available for an average of $42,850 AUD second-hand. This means that in just a few years, they’ve depreciated in value by 81.78%, making the 5 Series the worst affected ICE model on our list. 

2. BMW 2 Series

Just behind the 5 Series is another model of BMW – the 2 Series. With a lower initial asking price of $143,515 AUD, these models can depreciate by up to 69.91% of their value, with pre-owned options costing as little as $43,191 AUD on the second-hand market. 

3. Mazda CX-8

A Mazda CX-8 was the cheapest option in our top five, with second-hand models available for as little as $36,545 AUD. In 2022, however, the same model was selling at a median price of $113,686 AUD at retail. This marks a 67.85% depreciation in value. 

4. Jeep Grand Cherokee

With a $163,078 AUD median retail price in 2022, the Jeep Grand Cherokee has depreciated in value by as much as 66.23%. Nowadays, second-hand models are available for a much lower cost of $55,076 AUD – almost a third of their original value. 

5. BMW X3

Completing our top five is another BMW model. The X3 was valued at a median cost of $183,767 AUD in 2022, making it the second-most expensive option in our top five behind the BMW 5 Series. In just three years, however, its price on the second-hand market dropped to $63,017 AUD – a 65.71% decrease overall. 

EV vs ICE – which holds value better?

Upon first impression, internal combustion engine vehicles seem to depreciate in value faster than their EV counterparts. However, it’s important to note the range of depreciation, as, much like some EVs retain their value over time, there are also ICE vehicles that keep consistent pricing. 

The Suzuki Jimny, for example, kept the most consistent value across our ICE rankings. With a median retail price of $36,383 AUD in 2022, second-hand models are now available for $33,274 AUD on average, meaning it has only depreciated in value by 8.54%. Other ICE vehicles with low depreciation rates include the BMW 4-Series (9.98%) and the Toyota Landcruiser (10.83%). 

This makes it apparent that vehicle depreciation can vary by model hugely. It’s worth comparing the prices of your chosen vehicle before you buy, rather than assuming that an EV or ICE vehicle will inherently keep more or less of its value. 

What impacts vehicle depreciation?

There are many things that can affect a vehicle’s value over the years. For one, some technology can become obsolete fast, and car manufacturers are constantly creating new models to keep up with changing trends. If a vehicle’s tech starts to fall behind the curve, there can be less demand for the model, leading to lower value. 

Brand perception also plays a crucial role in depreciation, with cars that are no longer seen as trendy or exciting often losing their spark. Tesla, for example, is a much more controversial brand now than several years ago, which may play a part in the Model 3 being the EV with the fourth-fastest rate of value depreciation. 

Demand and supply issues can also cause a knock-on effect. Several of the most commonly sold ICE vehicles, like the Toyota Corolla and Mitsubishi Outlander, experience high rates of depreciation (58.77% and 44.80%, respectively), partly due to oversupply and the growing shift towards electrification. 

Why does this matter for buyers?

When the time comes to sell your car and move on to a new model, depreciation becomes a key factor in how much value you’re able to recuperate. A vehicle that loses its value quickly could cost you thousands of dollars more in the long run compared to a model that holds its worth. That’s why many buyers are now looking beyond just sticker prices and considering total cost of ownership, including how a car’s resale value fits into the bigger picture. 

This is especially important when evaluating electric vehicles. While some EVs may depreciate quickly, others retain value more effectively – especially when their tech, battery life, and brand reputation hold up over time. But there’s another angle to consider: EVs can align more closely with household energy efficiency goals. By integrating with home solar systems or taking advantage of off-peak electricity rates, EVs can help reduce not only transportation costs but also broader household energy expenses. In that sense, an EV can be more than just a vehicle – it can even become an important component of a more energy-conscious lifestyle. 

If you’re an EV user and looking to save money in other ways, a great way to do so is by comparing household energy prices. In shopping around and comparing plans, you can look for a deal with a competitive rate across a range of different plan types. While the extent of iSelect’s current offering for renewable energy lies in solar plans, we don’t have any EV vehicle compatible energy plans. We are however continuously working with our commercial partners to provide feedback on products that would best meet the demands of our future customers.