EVs have historically experienced higher depreciation rates compared to traditional petrol and diesel cars, but recent trends show this gap narrowing for many models. On average, electric cars can lose around 40-50% of their value within the first two to three years, which is still steeper than the average for gasoline vehicles, which typically retain closer to 60-70% of their value over the same period. For example, some popular EVs like the Tesla Model 3 or Audi Q4 e-tron depreciate by around 20-30% in the first year and up to 35-40% by year two. Other older or less in-demand models, such as the Renault Zoe or Nissan Leaf, have suffered sharper declines of over 60% within three years.directgap+2
Several key factors drive these depreciation challenges:
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Rapid Technology Advancements: Battery and EV technology is evolving quickly, with newer models offering longer ranges, faster charging, and better features. This fast pace means older EVs can feel outdated rapidly, pushing resale values down.caranalytics
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Battery Health Concerns: Used buyers worry about remaining battery capacity and the potential high cost of battery replacements, which weighs heavily on the resale price. EVs with well-maintained batteries and strong range retention tend to hold value better.wecovr+1
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Government Policy and Costs: From April 2025, UK electric vehicles are no longer fully exempt from Vehicle Excise Duty (road tax); they now pay annual fees starting at £195 after the first year, with an additional supplement for expensive EVs priced over £40,000. This added ownership cost can negatively impact resale values.wecovr
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Market Demand and Supply Dynamics: While second-hand EV sales in the UK grew by over 50% in early 2025, used EV prices continued falling, making electric cars more accessible but reflecting strong depreciation pressure in the short term. The expansion of used EV supply means buyers have more choices, pushing prices down for many models.electriccarscheme
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Model Popularity and Branding: Premium brands like Porsche, Tesla, and Mercedes-Benz tend to retain their values better, sometimes holding 60% or more of their original price after three years due to brand strength and desirability. Conversely, models from less premium or less popular brands depreciate faster.drive-electric+2
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Mileage and Condition: Like all cars, lower mileage EVs in excellent condition fetch higher resale prices. However, the average mileage also impacts battery health perceptions.directgap+1
Despite these challenges, the outlook is improving as electric vehicle adoption grows and consumer confidence in EVs strengthens. Advances in battery technology and broader charging infrastructure should help stabilise depreciation rates. Over time, EVs are expected to hold their residual values more comparably to internal combustion engine cars, especially popular and premium models.wecovr+1
In summary, EV depreciation in the UK remains higher on average than petrol and diesel cars, predominantly due to battery concerns, fast technology improvements, and recent shifts in ownership costs like new road taxes. However, the depreciation gap is closing, aided by growing demand, better tech, and premium brand strength. Buyers in the UK looking at EVs should research specific models’ depreciation patterns, consider total cost of ownership, and focus on well-regarded brands or models with strong battery warranties to minimise depreciation impact.
This evolving situation means used EVs, particularly those over three years old, are becoming attractive options for value-conscious buyers, while new EV purchasers should be aware of the steeper initial depreciation they may face in the first few years.