Tesla holds its value 2 times better than average gasoline car, study says

A new study shows that Tesla’s Model S is holding its value 2 times better than the average gasoline car and 3 times better than the average electric car despite the impact of EV incentives.

iSeeCars released a deep dive study into the depreciation of new vehicles to find the best bargains out there.

As previous studies have found, they noted that on average, electric vehicles depreciate faster than gasoline cars.

According to the new study, the average depreciation rate for electric vehicles is 56.6% versus 38.2% for the average gasoline car.

However, they have at least acknowledged that it is partly due to the fact that electric cars get incentives:

iSeeCars CEO Phong Ly said:

“Categorically, electric vehicles depreciate more than the average vehicle because resale values take into account the $7,500 federal tax credit and other state and local credits that were applied to these vehicles when they were bought new.”

It’s actually more than $7,500 since more than half of the electric cars in US are sold in California and New York, where they get up to $10,000.

Imagine that you are buying a car that comes with $10,000 in the trunk. After taking delivery and without ever driving the car, you take the $10,000 and resell it.

That brand new vehicle is already depreciating in value by $10,000 – greatly accelerating the depreciation process.  But you didn’t lose that money, it’s in your pocket, so as far as the buyer is concerned it isn’t really depreciation.

When accounting for the EV incentives, electric vehicles actually have a similar average depreciation rate as gasoline cars.

They found a silver lining in the electric vehicle segment with the Tesla Model S holding its value better than all other EVs and the average gasoline car:

Model S is Tesla’s oldest vehicle currently on the market with the best data for this study.

Ly suggests that obsolescence might also play a role in the high rate of depreciation of electric vehicles:

“Because the technology of EVs changes at a rapid pace, obsolescence also plays a role in their dramatic depreciation as well as consumer range anxiety and lack of public charging infrastructure.”

This could also partly explain why Tesla’s vehicles are holding their value better since they are seen as the leader in electric vehicle technology.

Electrek’s Take

I feel like this is often something that is misrepresented: EVs depreciate at a higher rate than gasoline cars.

This is simply not true and it would be clear to everyone if EVs wouldn’t get incentives and gasoline cars would instead be sold with their true cost, after accounting for their impact on health and the environment represented in the price.

If that were to happen, it would be a totally different picture.

Either way, I predict that we are going to soon see the depreciation rate of gasoline cars accelerate compared to electric vehicles as more compelling EVs hit every segment of the auto market and people start to see the writing on the wall.

Soon enough, no one will want to buy a gasoline vehicle because the electric future will be clear to most people and they will know that no one is going to want to buy their used gas car in 3-5 years hereby destroying its resale value.

I see that happening within the next 5 years.

What do you think? Let us know in the comment section below.