Clueless Kelley Blue Book: EVs Will Depreciate Faster than Gas Cars


Tesla Resale Value

USA Today recently asked the car-value “experts” at Kelly Blue Book to do some crystal ball gazing and speculate on the depreciation and resale value of today’s electric cars. That analysis suggests that, despite out-performing the rest of the market, most of today’s plug-in and electric cars will depreciate more dramatically over five years than their conventional, internal combustion counterparts … but could the people at Kelly Blue Book be utterly and totally full of s***?


“Pure electrics have been slow to catch on in the resale market,” says Eric Ibara, the current director of residual consulting for Kelley Blue Book who, clearly, hasn’t read a new car sales report in about 24 months and has no idea what he’s talking about re: historical growth of gas-powered cars vs. electric cars. According to Ibarra, EV buyers so far “have been willing to buy a new one, not a used electric vehicle.”

Of course, the trend of buying a new electric car vs. a used one makes perfect sense to anyone who doesn’t have their head buried shoulders-deep into their own rectum. To wit: used EVs don’t carry the same hefty government tax benefits and OEM lease programs that new electric cars do. Those special programs and tax incentives add up to a nearly free 2-year test drive on new electric cars, according to the Wall Street Journal (which the good people at Kelley Blue Book, apparently, don’t read), which is an offer that’s too good to pass up, if the actual demand for electric cars like the Nissan Leaf (rather than the imaginary lack of demand that Ibara pulled out of his behind) is any indication.

So, is the analysis from Kelley Blue Book’s USA Today study accurate? Will EV values plummet? Probably … and for the same reason that the resale value on the iMac I bought last year will also drop like a stone over the next two years while the resale value on my Craftsman tool set won’t. That reason, of course, being the rapid advance of a new technology and the price of the components like batteries, processors, and displays in my computer following Moore’s Law and dropping price while doubling power every 18 (ish) months – which is a good thing for EVs, and bad, bad news for the old iron-and-steel, gas-and-oil industry that Ibara and his staff at Kelley Blue Book seem to understand.

My suggestion? Skip KBB for a few years, at least until they replace guys like Ibara with people who are up-to-date with current market trends, market history, and technology that has more in common with an iPad than a Model T.


Sources: the Truth About Cars, USA Today.

About the Author

I've been in the auto industry 1997, and write for a number of blogs in the IM network. You can also find me on Twitter, at my Volvo fansite, or chasing my kids around Oak Park, IL.
  • Greg Sheldon

    Yep i think they goofed on this one.

  • Bob_Wallace

    Next 2, 3 years – who knows?

    Not long after EVs are likely to hold their value much better than an ICEV. Someone shopping used is likely to have a smaller transportation budget and as soon as people realize that EV are really cheap to drive then they’ll pay a premium for that sweet low per mile cost. (Seems like there’s data that efficient cars hold their value better.)

    A few years later EVs. Buy an EV with 150k on the odometer. Slap in a fresh battery for what will likely be a very reasonable price. (Any Volt news?)

    Cheap paint job, interior spruce-up and one would have a very decent ride that should got another 150k with essentially no problems. A 150k gasmobile gives one miles and miles of stuff breaking.

    We might see a lot more use of aluminum and composites in order to avoid rust-out.

    • I actually disagree with you- EVs have more in common with computers than cars, in terms of technology, manufacturing methods, etc. As battery tech, processor efficiency, etc. gets better, I think a 2 year old model EV, like a 2 year old iMac, is probably not gonna hold a ton of value.

      That doesn’t mean, however, that the “smart buy” is a wooden abacus …

      • Bob_Wallace

        How do you think EVs will change other than improved range?

        I bought my first computer in 1981-ish, an Apple II. And my first digital camera, a $600 2 meg compact in 2000.

        Both those technologies changes in multiple ways that made them much more usable and made replacement attractive.

        Cars are a mature technology. EVs perform like a dream. They’re cheap to power. The only improvement I see necessary is range.

        If a working stiff needs a car that will get them to work/store and an 100k, 70%-left LEAF will do the job don’t you think they’ll go that route over a ICEV that’s got a lot of miles on it and will cost a lot in fuel and repairs?

        • I don’t think cars are a mature technology at all, and I guess that’s the difference in our perspectives. I feel like cars, today, are in the same kind of place cell phones were in 2006, a year before the iPhone came out. A few people had an idea of what the future of that industry might become, but they didn’t have the complete vision or the thick pockets or whatever.

          SO, that’s my response to this. Cars aren’t a mature technology, they’re a stagnant technology, and there is a huge difference.

          • Bob_Wallace

            You don’t think ICEVs are a mature technology or are you saying that EVs will take cars to a new level?

          • I don’t think CARS are a mature technology. They’re primitive modes of transport, they require too much involvement, you operate them with levers and wheels and pedals like it’s 1880, etc.

            There can be a major shift in the way cars are seen and used and thought of- maybe it’ll take the under 30 crowd to think of what that will look like, but I know one thing: if I can hop into a 100 year old car and use it in basically the same way as a modern one, that’s a big problem.

          • Bob_Wallace

            I agree. Based on what we can see in the chute at the moment I think we’ll be riding around in self-driving EVs made with sustainable material in the not distant future.

            But I think the ICE has about as much squeezed out of it as can be had. That’s the mature technology of which I spoke.

  • Jim Smith

    considering how new the EV market is, i am not sure how any conclusions on the used EV market can be made. Once all the subsidies and rebates dry up, everyone will be able to see how it will be.

    • Maybe, but the prices on tech are dropping faster than most people realize. Getting a new battery in a Chevy Volt, for example, costs about 1/4 as much as putting a new engine in a Ford Focus these days.

      • Jim Smith

        apples to oranges. How much does it cost to replace the tiny battery in the volt this year compared to last year? And can i replace it with a bigger battery? And i get get rid of the ICE?

        • $2300 vs. about $4000. Compared to $8000 for a new 2.0 liter Ecoboost Ford 4 cyl.

        • Also: you can always build a custom Frankencar by removing the ICE, yes. A better bet would be to buy an EV instead of a hybrid, though, and skip the ICE all together.

          InB4 “Chevy Volt isn’t a hybrid”.

        • PrezNixon

          Actually, it is pretty rare that someone would replace a Ford Focus engine with a brand new engine if one failed outside of warranty. People either rebuild their own motor, or buy a rebuilt or used motor.

          Here is a sample of actual used battery packs for a Volt you can buy right now for between $1,255 to $2,000 dollars:

          2012 Battery Chevy Volt1.4,AT,BATTERY PACK & MODULES ASSY
          $2000.06 B & R Auto Wrecking – Tacoma

          2012 Battery Chevy VoltLITHIUM-ION BATTERY PACK & MODULES ASSM
          $1255 LKQ – Lecavalier Ste. Sophie Can-QC

          As time goes on, more used battery packs and refurbished battery packs will become available. Just like there is a used and refurbished market for Prius batteries today.

          Nobody puts a brand new factory motor into a gas car that is 8 years old with over 100K miles (Volt national battery warranty – even longer in Cali). The same will be done with EV’s and PHEV’s at a fraction of the cost of new.

  • Bi-Polar Bear

    I think the point is that we just don’t know. We DO know that a Civic or Corolla with 150,000 on the clock is capable of offering many more miles of reliable service. Why? Because they have been doing so for 20 years or more. We simply do not know, as of yet, whether the same can be said for an EV/hybrid/whatever.

    So, KBB has an opinion. That’s OK. That’s all anyone has at this point. You have an opinion, too, Jo, but bashing KBB doesn’t make your opinion any more valid than theirs.

    As you correctly point out, the value of a used EV is hampered by the lack of rebates and special lease incentives and so long as that is true, buying new will probably make better economic sense than buying used – which will depress the resale value of these vehicles. Your computer analogy is appropriate, too. With the changes in technology just over the horizon, people are going to be reluctant to pony up for a car that is technologically obsolete.

    Until the market gains experience with these cars – and they PROVE to offer good value as used cars – the public is going to be leery about paying top dollar for them in the used car market.

    I drove a Prius for 3 years and 75,000 miles. At that point, I began to have anxiety about what the Prius would cost me to keep running as the miles piled up. At that time, a new battery pack was approximately $4,000. So I traded it for a lightly used Honda Civic. I am fairly confident the Civic will give me at least 200,000 miles of faithful service assuming it is properly maintained. I did not feel as confident the Prius would do the same.

    The next 5 years will be a time of enormous change in the automotive universe. Any prognostications about what today’s cars will be worth in that bright new future are mere guesswork. Bookmark this topic and revisit it in 2019!

    • KBB’s opinion is based on factually incorrect premises, and pointing that out is hardly bashing. For example: in the early days of motoring, people kept a new car for many years, compared to today’s average of 2-3 years. EVs, which are a new product that provide a familiar service (like the Model T, a then-new technology which provided a service similar to a horse), play by the rules of new technology and follow an established “diffusion of innovations” curve. KBB’s application of 100-year-old ICE establishment to the new EV innovation show a surprising lack of historic vision and market understanding.

      Pointing out the reality of KBB’s failure to understand what’s happening isn’t an opinion, in the same way that pointing out a person’s failure to understand basic concepts like evolution isn’t about putting one opinion over another. That part about them having their heads up their a**es, though, falls under “artistic license”, and definitely *IS* opinion.


  • PrezNixon

    The same was said about the Prius when it first came out. The “common wisdom” among the gas car community in the year 2000 was that nobody would want a 5 year old used Prius because everyone would be paranoid of having to replace the battery. They said a used Prius more than 5 years old would be worthless.

    Now, more than 10 years later, we know this was a bunch of FUD. The Prius keeps its value at least as well as comparable gas cars, if not better. 300K mile Prius are still on the road, and replacement batteries, used batteries, and refurbished batteries are a fraction of what the gas car experts claimed they would cost. You can get a Prius with a bad battery back on the road for about the same cost as replacing a bad automatic transmission in a gas car.

    The same will happen with EV’s and PHEV’s over the long term.

  • PrezNixon

    The biggest problem with used EV/PHEV prices is competing with the new car incentives. But every single one of the Federal green vehicle incentives I’ve seen all automatically sunset at some point and come to an end. The same for every State green vehicle incentive I’ve seen.

    This means that everything we are seeing in the used EV/PHEV market will one day completely change, and do a flip-flop from the current pattern.

    When the incentives are gone or reduced, the value of used EV’s/PHEV’s will go up for a while before stabilizing again at a level comparable to gas car depreciation. This accelerated depreciation of new cars due to the incentives will end at the same time.

    This isn’t a long term problem. After a few years everything will stabilize.

  • PrezNixon

    Better technology in newer electric vehicles will make newer electric vehicles more appealing to more buyers. But that will cut more into other new gas car sales then it will cut into 5 year old used EV sales. The Halo effect of better newer electric cars will actually help 5+ year old used EV sales.

    Case in point is the Tesla Roadster. Until the Model S came out, used Roadster prices were dropping into the 40’s and 50’s price range. Now with the Model S blowing up the press, used 5 year old Roadster sales prices are pushing back up to the 60 to 70 thousand range. The Roadster didn’t get better. The market for Tesla’s of all kinds got better.

    EV improvements will make EV’s overall more popular. That will improve the market for all EV’s, including even older ones with slightly outdated technology.

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