Used electric cars lose half their value in two years – manufacturers blamed for

Electric cars are losing more than half their value within two years, according to a new report.

Analysis by Cox Automotive has suggested that a 24-month-old battery car sold to the trade in April on average retained just 47 per cent of its original new cost.

However, two years earlier, an EV of the same age profile was – on average – holding on to 83 per cent of its new price.

The dramatic acceleration in depreciation is being blamed on manufacturers who are caught in an unprecedented catch 22 scenario currently playing out in the automotive sector.

With car makers being forced to increase their sales of EVs to meet Government-mandated targets, they are offering huge discounts on new models to make them more attractive to new customers in order to meet their quotas.

But this is having a significant knock-on impact for residual prices, as drivers are seeing more value for money buying new rather than opting for a nearly-new second-hand EV, which has seen used prices tumble.

A new report suggests the average two-year-old electric car has lost 53% of its original new value as demand for used EVs is being impacted by huge new model discounts and a surge in second-hand availability

This graphs shows the average auction sale price for EVs under 24 months old as a percentage of their original cost new, with the typical electric car retaining just 47% of its showroom price

The Zero Emission Vehicle (ZEV) mandate introduced to law last January requires mainstream car manufacturers to sell an increasing share of EVs every year between now and 2035.

Failure to adhere to these quotas can result in significant fines of £12,000 for every car sold below the required threshold for that year.

In 2024, the minimum quota was for 22 per cent of all deliveries by manufacturers to be zero-emission electric cars.

However, the target jumps to 28 per cent this year, 33 per cent in 2026 and 80 per cent by 2030.

Officials reported that every mainstream brand achieved last year’s 22 per cent EV sales mix – though at a huge cost to car companies.

The Society of Motor Manufacturers and Traders (SMMT) reported that makers lost a collective £4billion in discounted prices as they tried to make electric cars appear more attractive to petrol and diesel counterparts.

Mike Hawes, chief exec at the trade body, described the scale of these discounts as ‘unsustainable’. 

Electric future: The ZEV mandate forces car makers to sell an increasing share of EVs each year between now and 2035. Manufacturers provided £4bn worth of discounts on new models to inflate demand last year

Labour’s decision to force EV owners to pay car tax for the first time from April has also dampened demand for new models – and triggered further manufacturer discounts.

Both Vauxhall and Abarth – the performance division of Fiat – have recently reduced prices of their electric cars so that they sit below a £40,000 expensive car tax supplement being imposed on new EVs starting from next year. 

But Cox Automotive Europe discounts are now having a huge knock-on effect on the second-hand market, because ‘nearly new’ used EVs are falling in value as a direct result.

Second-hand electric vehicle prices are also taking a hit from the huge acceleration in available models coming to market, with March seeing a record 69,313 new electric cars entering the road.

A rapid development of battery technology is also stinging the value of quickly outdated older EVs, while the emergence of new cheaper brands – predominantly from China – is also pushing second-hand values lower.

As such, a two-year-old electric car today is now holding just 53 per cent of its original price.

In contrast, the average diesel car selling to trade with the same age profile is retaining 30 per cent of its new value. 

Cox Automotive Europe says huge discounts on new models are now having a huge knock-on effect on the second-hand market, because ‘nearly new’ used EVs are falling in value as a direct result

When second-hand EV values were at their peak in 2022 – as a result of supply constraints around the Covid-19 pandemic – a two-year-old electric car was losing only 17 per cent of its showroom price. 

Philip Nothard, insight director at Cox Automotive Europe, said: ‘The current performance of nearly-new EVs in the used market is still much lower than we would anticipate for vehicles in this age profile. 

‘The heavy discounts offered on new vehicles mean that consumers can pick up a brand-new model for the same price as a nearly-new model. 

‘This gives consumers very little incentive to consider them, which is a real blow to a market that needs all the incentives it can get its hands on.’

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