50% in 3 years
EV depreciation and resale value
EVs depreciate faster than ICE vehicles in years 1-3 — typically 35-50% versus 25-30% for gas cars — driven by rapid technology improvements and battery degradation concerns. Tesla holds value better than most brands. EV depreciation may slow as the used market matures and battery lifespans become better understood.
Level
Key takeaways
04 · ideas- Some EVs lose 50% of value in 3 years vs. 35% for comparable gas cars
- Tesla holds value better than other EV brands historically
- Battery health report and charging history significantly affect resale
- Tax credit changes make newer EVs cheaper, pressuring used EV prices
Depreciation is how much value a car loses over time. EVs currently depreciate faster than equivalent gas cars for several reasons:
- Tax credits make new EVs cheaper: A $40,000 new EV with a $7,500 credit effectively costs $32,500. A 2-year-old used version of the same car might be priced at $28,000 — only $3,500 less than a new one with the credit.
- Technology uncertainty: Buyers worry about battery degradation and whether charging infrastructure will be good enough.
- Rapid technology advancement: A 2022 EV with 250 miles range faces competition from 2024 models with 300+ miles range at the same price.
What this means for buyers: Used EVs can be excellent value. A 2–3 year old EV with low mileage often has 90%+ battery health and provides most of the EV benefits at a significant discount.