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***?

Absolutely!

“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.

 

Jo Borrás

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.