EV Depreciation: How Much Value They Really Lose

Depreciation is the largest cost of owning any new car, and on an EV it is larger still. The average electric vehicle loses 57.2% of its value in five years against 41.8% for the market as a whole — a gap of more than fifteen percentage points.

That’s the bad news if you’re buying new. It’s the entire opportunity if you’re buying used. This guide covers what the current data actually shows, why some EVs fall much harder than others, and why the figures you’re reading may be describing a market that has already changed.

The numbers

The cleanest read comes from iSeeCars’ 2026 depreciation study, which examined transaction prices for more than 950,000 five-year-old used vehicles sold between March 2025 and February 2026. Full-electric models lost the largest share of their original transaction price of any segment.

Read the hybrid and EV rows together. Both are “electrified”, and they sit at opposite ends of the retention spectrum — which tells you the market isn’t punishing electrification. It’s punishing something specific to full EVs.

The like-for-like comparison

Segment averages have the same problem as the EV insurance headline: the EV category skews luxury, and luxury cars depreciate hard regardless of what powers them. The honest test is comparing models from the same manufacturer.

BMW makes that easy, because its electric and petrol models sit alongside each other in the same showrooms.

The pattern holds across the lineup: roughly 13 to 15 points worse for the electric version of a closely comparable car. So this isn’t purely a composition artifact. Some of it is luxury depreciation doing what luxury depreciation does — but a real EV penalty sits underneath it.

Model by model

Even the strongest performers here sit above the all-vehicle average of 41.8%. The Model 3 is one of the better EVs for resale and still loses more than half its value.

Four reasons EVs fall harder

1. Battery anxiety, not battery failure

The dominant factor is fear rather than fact. A buyer looking at a five-year-old petrol car doesn’t worry the engine is about to fall out. A buyer looking at a five-year-old EV worries about a pack replacement they’ve heard costs a fortune.

The actual data is reassuring — average degradation runs about 2.3% a year, leaving a typical pack above 80% at eight years, as we cover in EV battery health and degradation. But resale value is set by what buyers believe, not by what fleet studies show. The discount is priced in whether or not your particular battery deserves it.

2. Technology moves fast

A 2020 EV might manage 220 miles on a good day. Its 2025 replacement does 300, charges considerably faster, and has better software. Nothing comparable happened to petrol cars over the same five years — a 2020 Accord is still a perfectly current Accord.

The used buyer isn’t just buying an older car. They’re buying an older generation, and they price it accordingly.

3. Charging standards can strand a car

This is the underrated one, and it explains why the Nissan LEAF leads the depreciation table.

The LEAF used the CHAdeMO connector, a standard the North American market has effectively abandoned in favour of CCS and now NACS. A car whose fast-charging access shrinks every year has a shrinking pool of buyers — and no software update fixes a physical connector.

If resale matters to you, the charging port is a resale specification, not just a convenience one. Cars on NACS or CCS have a future; cars on an orphaned standard do not.

4. The tax credit distorted the market — and that’s now changing

For years the $7,500 federal credit made new EVs artificially cheap, which dragged used values down with them. A used EV has to compete with a new one, and it was competing against a new one priced $7,500 below sticker.

That credit ended for vehicles acquired after 30 September 2025. The depreciation data above covers March 2025 to February 2026 — mostly the period when the credit still existed.

Which leads to the most useful forward-looking point in this guide: with the new-EV credit gone, the downward pressure it exerted on used values goes with it. New EVs now cost their buyers full price, which makes used EVs relatively more attractive rather than less. Working the other way, off-lease EV inventory surged about 25.7% in 2026, pushing supply up. Those two forces point in opposite directions, and the honest position is that nobody yet knows which wins.

What this costs in dollars

On a $50,000 EV losing 57.2%, that’s $28,600 gone in five years. The same money in a vehicle depreciating at the market average of 41.8% loses $20,900 — a difference of $7,700.

Set that against the EV’s running-cost advantages: roughly $4,500 in fuel and $3,000 in maintenance over the same period. On an average-mileage new purchase, depreciation eats most of what charging and servicing save. That’s precisely why our five-year cost comparison concludes that a new EV bought at average mileage without home charging often isn’t the cheaper option.

Note also what depreciation is not: it isn’t a cash cost. You only realise it when you sell. Keep the car for ten years and the annual bite shrinks dramatically while the fuel and maintenance savings keep accruing every year. Time is the single most effective defence against EV depreciation.

The other side of the same number

Everything above is a warning to new-car buyers. Turned around, it’s the best value proposition in the used market.

A five-year-old EV that has lost 57% of its value has had that loss absorbed by somebody else — while its fuel and maintenance advantages transfer to you completely intact. You inherit cheap running costs and skip the expensive part.

The catch is that you’re buying a battery of unknown condition, and the market’s fear is only partly irrational: some packs genuinely have been abused. That’s a solvable problem, and our used EV buying checklist covers how to verify State of Health before you pay. Solve it, and the depreciation table above is a discount schedule rather than a warning.

How to lose less

• Buy used. The steepest depreciation happens in years one to three. Letting someone else take it is the single largest saving available in EV ownership.
• Keep it longer. Depreciation is front-loaded; running-cost savings are not. The longer you hold, the better the EV’s total picture looks.
• Choose a mainstream model over a luxury one. Luxury depreciation and EV depreciation compound. The worst performers in the data are almost all premium badges.
• Check the charging standard. NACS or CCS. An orphaned connector is a resale problem you cannot fix later.
• Document battery health. Take dated State of Health readings through your ownership. A documented pack sells better than an undocumented one, because you’re selling against a buyer’s fear.
• Keep the service history. Same logic. Evidence beats reassurance.

Frequently asked questions

Do EVs depreciate more than hybrids? Considerably — 57.2% against 35.4% over five years. Hybrids appeal to a much larger buyer pool and carry none of the battery-replacement anxiety, so they hold value better than any other powertrain.

Will EV depreciation improve? Possibly. The end of the new-EV tax credit removes a force that was suppressing used values, and battery longevity data keeps improving. Working against that: a large wave of off-lease cars is arriving. The direction isn’t settled.

Does battery health affect resale price? Increasingly, yes. Buyers are getting better at checking, and a documented State of Health figure is becoming a selling point — with its absence becoming a negotiating lever for the buyer.

Is leasing a way around depreciation? It transfers the risk rather than removing it — the leasing company prices expected depreciation into your monthly payment. On a fast-depreciating car, leases are correspondingly expensive. What leasing does buy you is certainty about the cost.

Which EVs hold value best? The picture shifts constantly, but the pattern is consistent: mainstream over luxury, current charging standards over orphaned ones, and models with strong brand demand over experimental ones. Compare running costs for specific models on FuelEconomy.gov alongside resale data before committing.

The short version

Expect a new EV to lose roughly 57% of its value in five years against 42% for the market — about 15 points worse, and about 14 points worse even in like-for-like comparisons within a single brand. On a $50,000 car that’s around $7,700 of extra loss, enough to cancel most of the fuel and maintenance savings.

Two ways out, and they’re the same insight from opposite ends: buy used, or keep it long. The depreciation that makes a new EV an expensive purchase is exactly what makes a four-year-old one a bargain.

Depreciation is also what decides the buying question against a hybrid, because the five-year gap is larger than five years of fuel savings combined.

Steep depreciation has a second side: it is what makes a three-year-old EV the strongest value in the market.

That steep early depreciation used to be masked for lease customers by a tax credit baked invisibly into the payment — it isn’t anymore, which changes how leasing and buying actually compare.