In general, once you’ve bought something new, its value tends to sink the moment you take it out of the box. For a new car, the value plummets as soon as you drive it off the dealership lot. It’s called depreciation, and with cars it is especially brutal. That shiny new car you just bought for $30,000 might be worth less than $25,000 after just a week of ownership. With very few exceptions (like vintage muscle cars), most cars suffer a steep drop in value almost immediately.
This may go doubly true for electric cars it seems—at least in Europe. Mitsubishi has put out a chart to the BBC which suggests that the higher up-front costs of an electric car, plus the increased depreciation, mean in the long haul it could cost a lot more than a petrol powered car. Now why would they do that?
Mitsubishi seems to think that electric cars will lose their value quicker mostly because of the battery packs. There problem is, nobody knows for sure what will happen to these battery packs over the long term. If they are anything like my laptop battery, they will gradually lose their ability to hold a charge, to the point where they hold only a fraction of what they used to. That means a 10-year old electric car might have just half the range of a brand new electric car of the same model.
Mitsubishi compared their £28,990 i-Miev electric car with a £10,610 Fiat 500 Lounge 1.2 liter. Over three years, the running cost of the i-Miev, including deprecation (down 50% in just 36 months!) is £10,572. The Fiat 500, meanwhile, has running costs of just £9,339, including £3,280 for gas and £5,411 in depreciation. So will the i-Miev really lose half of its value in just three years?
That is up to the market. Automakers are making a big push on electric cars, and while depreciation will certainly be taken into account. However, I also feel most of the “early adapters” to electric cars are not going to be looking to save money, at least not right away. Electric cars have a higher up-front cost, limited range (for now), and fewer “fueling” stations. Even if they do depreciate at a rapid rate though, that means people in the market for a used electric car will have more bargaining power while those with more purchasing power can go by the latest and greatest electric car. Depreciation doesn’t have to be a bad thing.
Source: BBC | Image: Mitsubishi