“The steep rate of depreciation for used plug-in electric vehicles can be attributed to limited range, manufacturer incentives and federal tax credits intended to offset the higher prices of new plug-in electric vehicles,” said Jonathan Banks, executive automotive analyst for the NADA Used Car Guide.
“Generous tax credits can certainly promote more new sales than would have been achieved otherwise, but they also have a negative impact on future resale values for one basic reason — few consumers are willing to purchase a credit-ineligible, used plug-in electric vehicle for more than they would pay for a new one, less the federal tax credit,” Banks added. “So at a minimum, late-model used plug-in electric vehicle prices must logically max out below the manufacturer’s suggested retail price minus the credit.”
For example, in the May 2012 edition of the NADA Official Used Car Guide, average trade-in values for the 2011 Chevrolet Volt and Nissan Leaf were $31,060 and $24,857, respectively. In May 2013, values for the Volt and Leaf had fallen by a combined average of nearly $10,000, to $21,235 and $14,792, respectively. As a percentage of MSRP, the Volt retained only 49% of its value and the Leaf retained 42%.
By comparison, average trade-in values for a 2011 Toyota Prius hybrid fell by $4,735, to $16,490 over the same period, while values for a 2011 Chevrolet Cruze with a four-cylinder gasoline engine dropped by $2,548, to $11,602, placing retained values at 63% and 62%, respectively.
Considering the limited range of plug-in electric vehicles – coupled with substantial incentives, tax credits and moderating gasoline prices – NADA estimates the annual rate of depreciation for used plug-in electric vehicles will improve little over the next two years, with annual losses going from 31.5% in 2012 to 29.7% in 2013 and 27.4% in 2014.
In terms of U.S. dollars, a plug-in electric vehicle worth $20,000 in 2012 is predicted to lose $9,792 of its value by the end of 2014, while similarly priced gasoline and hybrid vehicles over the same period are expected to lose $5,573 and $6,455, respectively.