EVs and luxury vehicles depreciate faster in resale value than others over 5 years

[Count Orlok]

Not surprisingly luxury autos top the list but I'm a little surprised EVs are so high. One of the claims I keep seeing on EV boards is how they don't depreciate as fast but it seems that is only in comparison to high-end vehicles.

Interestingly, electric vehicles also depreciated quite heavily, though they were just short of the abysmal numbers in luxury segments. The Nissan Leaf depreciated most among EVs, dropping by 49.1 percent. The average EV depreciation is 44.2 percent, with the Tesla Model S and Model X sliding in right under the bar at 43.7 and 38.8 percent, respectively.

Cars with the worst resale value in 2022

So I wonder if the speculation about the R1T/S maintaining value is misguided. Thoughts?

Sponsored

 

[domoplaytime]

Yes, misguided.

Value is tricky when inflation is high, so let's use clear terms. The nominal value (what normal people talk about) may seem resilient, but any appearance of low depreciation is masked by inflation. The real value (what economists talk about, i.e. subtracting the effects of inflation) will show depreciation just like other expensive EVs. The R1 series in particular will suffer from 400V architecture limitations, and possibly design flaws that won't exist in future platforms.

 

[Donald Stanfield]

Trucks in general tend to hold their value better because they are unique vehicles and the cost of entry for new ones is high. People who NEED what a truck provides are still going to pay the higher used price because no other vehicle fits their needs. I'm not sure how this will translate to Rivian because EV limitations hamper its utility as a truck. The guy buying the used F150 for work, or who needs to tow his trailer, probably isn't going to be in the market for an EV who's range is far too limited for that use case as a regular thing.

Time will tell but I have a feeling the resale market for Rivian will overlap much more with the buyers looking for used luxury vehicles than buyers looking for used trucks and as such will depreciate in a similar way.

 

[Count Orlok]

Yes, misguided.

Value is tricky when inflation is high, so let's use clear terms. The nominal value (what normal people talk about) may seem resilient, but any appearance of low depreciation is masked by inflation. The real value (what economists talk about, i.e. subtracting the effects of inflation) will show depreciation just like other expensive EVs. The R1 series in particular will suffer from 400V architecture limitations, and possibly design flaws that won't exist in future platforms.

Historically inflation isn't high, especially over the 5 years period under study here; and inflation hits all vehicle values equally.

I think you're right that, in essence, a 5 year old EV is going to depreciate because the technology changes so rapidly. Once the R2 is out (probably in 2030 (just kidding)) the R1 will probably see a drop in value.

 

[johstacy]

I think as Rivian continues to evolve the R1T over time with software updates and hardware (kitchen... ect) that the R1T will hold it's value especially with the Overlanding community.

 

[DJG]

Not surprisingly luxury autos top the list but I'm a little surprised EVs are so high. One of the claims I keep seeing on EV boards is how they don't depreciate as fast but it seems that is only in comparison to high-end vehicles.




Cars with the worst resale value in 2022

So I wonder if the speculation about the R1T/S maintaining value is misguided. Thoughts?

The issue is they are using the Nissan Leaf, which I wouldn't even consider a valid data point to use because it uses outdated/poorly conceived technology that directly leads to high degradation and therefore depreciation. If you throw that out, which you should, the data would be different.

 

[jjswan33]

I expect those with pre-march 1st pricing will see their vehicles hold their value better than the average EV but long term I think the used EV market still has to establish itself, I don’t think anyone knows and I think it will evolve unpredictably.

 

[DJG]

Yes, misguided.

Value is tricky when inflation is high, so let's use clear terms. The nominal value (what normal people talk about) may seem resilient, but any appearance of low depreciation is masked by inflation. The real value (what economists talk about, i.e. subtracting the effects of inflation) will show depreciation just like other expensive EVs. The R1 series in particular will suffer from 400V architecture limitations, and possibly design flaws that won't exist in future platforms.

Inflation affects everything the same, so that doesn't matter and you can just look at the observable nominal values. A modern electric vehicle will hold it's value (relatively speaking) more than an ICE vehicle, and that's not really debatable in my mind. You can point to any number of objective reasons why that's the case, namely maintenance costs, operating costs, useful life, and software updates that add value over time (assuming the manufacturer does them).

In the case of the latter, I have no doubt a Rivian will hold it's value well over time, regardless of whether it has 400v architecture. Frankly, 400v vs. 800v is a vastly overhyped differentiation. Case in point, if it was that important, the Hyundai and Kia vehicles would be able to sell for a lot more than they do, but instead they are budget options in the EV space.

 

[DJG]

I'll also add this. Using data from the past (good or bad quality as it may be) would not be smart in this case given the environment that is expected over the next several years. If EV purchases are expected to enter an exponential growth phase over the next five years, does anyone really believe that an EV purchased today will depreciate as much or more than an average ICE vehicle?

Anyone purchasing an ICE vehicle today and expecting to sell it in 5-7 years absolutely needs to expect a greatly shrinking demand pool, and simple economics tells you what that yields. Especially so for luxury ICE vehicles, which I could see experiencing depreciation in the realm of 80% between today and five years from now. No one in their right mind would pay over $50k for a five year old former luxury ICE vehicle in five years when a brand new EV with similar quality can be purchased at the same price or less.

 

[Inkedsphynx]

I also believe the rising demand for EVs will likely, in the very short term, bouy values for existing EVs, but once all the major manufacturers have transitioned to primarily EV manufacturing, that will cease to be the case as the supply will outstrip the demand, most likely.

I still expect the R1s to hold value well, though they will depreciate some. I'm expecting less than a similar aged ICE but not a huge gap.

 

[F1shSkier]

Not surprisingly luxury autos top the list but I'm a little surprised EVs are so high.

That's a misleading article and I wouldn't generalize that for EV's. Keep in mind nearly all of the auto outlets are still relying on ICE manufacturer sponsor dollars.

If you click through to the iseecars article, it shows this chart, which only has 4 vehicles and doesn't have the Tesla Model 3 or Y since they are too new for the "study":

https://www.iseecars.com/cars-that-hold-their-value-study

Other articles say that most EV's are actually holding their value best: https://www.cars.com/articles/what-are-the-used-cars-with-the-highest-rising-resale-value-449843/

 

[NY_Rob]

It also depends on the EV on a case by case basis.
MY 2017 i3 was priced at a ridiculous $53K when new in 2017. I purchased it in 2021 for $21K which was very reasonable IMO for a EV with 30K miles on it. So when you look at the i3 it lost $32K in value (60%) in just 4 yrs... but it never should have been priced at $53K to begin with so the depreciation number is sort of deceptive in this case.

 

[Arky]

I think as Rivian continues to evolve the R1T over time with software updates and hardware (kitchen... ect) that the R1T will hold it's value especially with the Overlanding community.

Overlanding community needs vehicles that they can repair and are reliable out in the field. So far I don't have high confidence for this one on that front.

Inflation still running wild and the R1 being realistically pretty competitive among the limited amount of EV trucks (especially at the initial price) should buoy values a bit, so I don't expect it to crash down like most luxury cars.

 

[COdogman]

Luxury vehicles have always depreciated faster than other vehicles. Some rare models hold their value better than others, but it’s still more relative depreciation compared to a less expensive Subaru or Toyota. I think most EVs should be separated from “luxury” and considered on a case by case basis.

Look at it this way - it’s still better than buying an RV.

 

[johstacy]

Overlanding community needs vehicles that they can repair and are reliable out in the field. So far I don't have high confidence for this one on that front.

Inflation still running wild and the R1 being realistically pretty competitive among the limited amount of EV trucks (especially at the initial price) should buoy values a bit, so I don't expect it to crash down like most luxury cars.

Fair enough the Rivian really hasn't been put through it's paces over a long period of time doing overlanding to understand the challenges of doing that with an EV.... though I do plan to give it my best!

Because I am new to the EV community I really am no authority on how well they would or should hold there value but you would think that something that is supposed to get better over time with new capabilities (software updates) that the value would hold strong. Most gas powered vehicles value goes down the more miles you put on them and they never gain new functionality unless you modify the vehicle yourself. I just making speculation here again I am new to the EV world

Sponsored