The Guardian reports on high depreciation rates of electric cars in the UK: Paul Fraser-Bennison bought an electric Renault Twizy for £7,200. When he wanted to part-exchange it after less than a year he was offered only £2,500, meaning it had lost 62 per cent of its value in less than 12 months. He eventually sold it for £3,500 which is still only 48 per cent of its price new.
Further investigation reveals that this case isn't unusual. Renault's Fluence Z.E. sells new for £18,745 when you take the Government's £5,000 grant into account. You can buy a 2012 12-reg model with 5,371 miles for £8,000. That's 57 per cent depreciation. A little less drastic was the Nissan Leaf. I saw a 2012 model for £14,299. It would have been £25,990 new, meaning it's lost 45 per cent in a year.
Renault Twizy
The latest data from CAP Automotive shows that, over the past three years, all-electric vehicles have retained only 20.2 per cent of their value. There is some good news in that CAP is forecasting an improvement to 26 per cent retained value for RVs over the next three years/30,000 miles, but that's still way behind diesel cars which on average have retained 44.7 per cent of their value. Hybrids have retained 45.3 per cent over the past three years.
Assuming that battery-powered cars will make up a significant part of our future motoring landscape, is depreciation of this magnitude going to become the norm?
Mark Norman from CAP Consulting has done a lot of work on electric vehicles. He says: "The price is what is killing them at the moment. Even after the £5,000 subsidy they're too expensive and people still have questions about them. When the prices start to come down, they will become more popular, early adopters will become advocates, depreciation will slow and the market will stabilise."
Nissan Leaf
Nissan Leaf
Currently, we're a long way from that stabilisation and it's impossible to know when we'll get to it. More worryingly for EV owners, the used prices the Twizy owner above was quoted were from Renault dealers. The reality is that dealers are trying to get away with offering as little as possible for a used model because they don't know what the used market for them is. As Norman says, they're used car "pricing pioneers".
CAP's research shows that the actual amount of depreciation as a sum is almost the same in Germany as it is in the UK. However, in Germany there is no electric vehicle price subsidy: with a higher starting price, the rate of depreciation is significantly lower.
So subsidies do nothing to help cars maintain their value. And with only 2,538 EVs going to new UK homes so far this year – 0.14 per cent all new cars sold – they plainly do little for sales. Sadly, the early adopters of electric motoring appear to be paying the biggest price.
Conversely, the savage depreciation of a new electric car is precisely what could make it a good used buy. If an electric car suits your lifestyle, you can now buy a used example that represents better value than a conventionally fuelled alternative.
A year-old Nissan Leaf will have cost £25,990 new, or £7,000 more than a similarly sized diesel Ford Focus at £18,700. After 12 months, CAP Automotive says the Focus will be worth about 63 per cent of its new price while the Leaf will be worth about 53 per cent. This will have helped the EV's premium shrink from £7,000 to £2,000. Buyers will probably get that back in the first couple of years courtesy of not having to buy diesel.
Many dealers are as unsure about the prices they should be charging as buyers. They've taken a risk buying the used EV so the potential customer has nothing to lose with a cheekily low offer. Currently, the dealer probably doesn't know when, or even if, another customer will come along.
