Poor resale values of EVs threaten adoption, warn some experts
A car loses value as soon as you drive it off the lot, but electric vehicles are taking this adage to a new level. That's becoming a major barrier to wider adoption, according to some industry and investment experts.
A recent study from iSeeCars.com showed the average price of a 1- to 5-year-old used EV in the U.S. fell 31.8% over the past 12 months, equating to a value loss of $14,418. In comparison, the average price for a comparably aged internal combustion engine vehicle fell just 3.6%.
While lower used EV prices could increase their desirability to some buyers, they can also reduce demand for new electric vehicles, according to Karl Brauer, executive analyst at iSeeCars.
"The value a new car loses in the first few years is the single most expensive aspect of owning a new vehicle," he said, explaining that "as more new car shoppers become aware of the massive drop in EV values they will be less interested in buying one."
Speaking to CNBC's "Street Signs Asia" on Monday, David Kuo, stock analyst and co-founder at the Smart Investor, said that the inability of EVs to retain value had kept him from investing in the industry.
According to Kuo, EVs are analogous to other consumer electronics like laptops and cell phones in that they tend to lose value and relevance quickly after being sold.
"The same [depreciation] is going to happen to electric vehicles; it'll probably cost you $20,000, $30,000 to buy one, but in a year's time it will depreciate much faster than an internal combustion engine car," he said.
Industry insiders have also flagged EV resale problems. Speaking to Bloomberg late last year, representatives from VW and Toyota said depreciation was hurting the value proposition of their battery-powered vehicles.
Kuo