Tesla Isn't Alone, Most Electric Cars Lose Value Faster Than You Might Think

• Cars
• Electric Vehicles

Electric cars are nothing new. Not even in the sense that, yes technically, electric vehicles have been around for over a century, but even in the mainstream automotive world, EVs have been regular sights on the road now for over a decade. The infrastructure has come on leaps and bounds: they can be charged in minutes, battery packs don't degrade as badly as the naysayers feared they would, and they are even getting more affordable to buy, too.

However, for some reason, they still depreciate far quicker than their gas-powered counterparts. EVs are fairly attractive as a new buy for many of us, but secondhand models are just not that desirable, it would seem. According to Thunder Said Energy, while ICE cars tend to depreciate on average by $0.11 per mile covered, EVs come in at $0.27 per mile, demonstrating just how wide the gulf is. There are variables that could affect the value of this data, for example, over the past few years, many EVs will have been purchased with a $7,500 reduction, courtesy of the now-canceled federal tax credits. This, effectively, immediately places $7,500 worth of depreciation onto qualifying vehicles, as surely no one would pay more for a used model. 

This needs to be taken into account when looking at electric vs. gas in terms of depreciation; it's important to compare the actual price paid, and not just the MSRP listed prior to incentives. With that being said, we can't rely solely on depreciation reports, as it's unclear whether or not the effective $7,500 reduction has been factored into the calculations. So, while the data suggests electric cars depreciate at a faster rate, it's important to explore other avenues to verify the claim.

The data suggests electric cars lose their value quicker than gas models

It's true that Tesla resale values aren't what they used to be. This might be down to their huge popularity; a large supply on the used market might be outpacing demand. Other factors are always at play too, such as Tesla CEO Elon Musk's political controversies, and how the brand fares in relation to new competition, such as Rivian and Lucid. This steep drop-off in value was seen clear as day recently when a 2021 Tesla Model Y Long Range sold for less than half of its original MSRP, despite being fairly well presented.

Back in 2021, the Tesla cost its owner $54,190, and came in a smart specification, with a smart Satin Dark Gray wrap, 20-inch Induction wheels, and a black leather interior. If we factor in a $7,500 reduction, courtesy of the federal tax credits, that gives us a revised purchase price of $46,690. However, this attractive spec and reasonable odometer reading of just 48,500 miles did little to excite buyers when it came up for auction, with the hammer falling at a miserable $24,888. CarEdge's depreciation calculator suggests this is quite typical of the model, suggesting that a Model Y will drop 57% of its value after four years on the road and 48,000 miles. Judging by this estimate, the auction seller actually did quite well, losing roughly 47% of the original purchase price, taking into account a likely $7,500 reduction on the MSRP when new. 

In addition, CarEdge has ranked 185 cars according to how well, or how poorly, they retain value. While Tesla models do not feature on the list, among the worst performers are models like the Nissan Leaf, Wrangler 4xe, Volkswagen ID.4, Subaru Solterra, and Toyota bZ4x.

Digging deeper into electric and gas depreciation comparisons

The Wrangler 4xe — one of which we test drove in 2024 — is an interesting model to highlight, as of course, there is a near-identical gas-powered model with which we can compare in terms of depreciation. Once again relying on data sourced from CarEdge, we see that the gas-powered Wrangler typically can be expected to shed 29% of its value in the first five years of ownership. This is based upon a new price of $48,226 and 13,500 miles being covered each year, and it translates to a total loss of $14,116.

By way of comparison, the Wrangler 4xe is projected to drop a staggering 59% of its value over those same years and miles. The starting price given by CarEdge is higher, at $61,887, to reflect the model's real-world higher starting price. As such, the amount lost is also considerably more, at $36,235. Even if we strip the qualified amount of EV tax credits from that figure, and factor in cheaper running and maintenance costs, the traditionally motivated Wrangler still looks to be the financially safer bet after five years on the road.

Similar comparisons can be made elsewhere, and comparing Toyota's bZ4X and RAV4 brings similar results, as does pitting Subaru's Crosstrek against the Solterra. There are many reasons why Tesla models might drop value quickly, from over saturation in the market to the CEO's controversial political viewpoints, but the truth is the same results can be seen across the entire EV market.