Electric vehicles are experiencing a significant depreciation in value, with new research indicating that they lose more than 50% of their original cost within the first two years of ownership. According to data from Cox Automotive, the residual value of electric vehicles at 24 months old has dropped from 83% of their original cost new (OCN) value in 2022 to just 47% in April 2025. This rapid depreciation is attributed to a surge in electric vehicle registrations and heavy discounts offered by manufacturers on new models.
Key Findings
- Electric vehicles lose over 50% of their value within two years.
- The residual value of EVs at 24 months dropped from 83% in 2022 to 47% in 2025.
- Diesel vehicles retain 70% of their value after two years.
- Used EV sales have surged by 58.5% since the start of the year.
- EVs between three and five years old see a modest 15% depreciation.
Factors Contributing to Depreciation
The significant drop in value is linked to the increasing number of new electric vehicle registrations. In March 2025, nearly 70,000 new electric vehicles were sold, a record for the month. Manufacturers’ aggressive pricing strategies, including discounts to avoid the Expensive Car Supplement tax, have contributed to the trend. For instance, Vauxhall reduced prices on its entire electric lineup to below £40,000.
Philip Nothard, insight director at Cox Automotive Europe, noted that while used vehicle prices peaked in 2022 due to the Covid-19 pandemic, the current performance of nearly-new EVs is still lower than expected. He stated, “The heavy discounts offered on new vehicles mean that consumers can pick up a brand-new model for the same price as a nearly-new model. This gives consumers very little incentive to consider nearly-new EVs, which is a real blow to a market that needs all the incentives it can get.”
Impact on the Used Car Market
Despite the initial sharp depreciation, electric vehicles between three and five years old show a more modest 15% decrease in value. Cox Automotive suggests this is because they are less affected by manufacturer discounts and appeal to a different group of buyers. The used car market remains a crucial source of profitability for the automotive sector, with used EV sales surging by 58.5% since the start of the year, making up a record 3.3% of the second-hand market.
Nothard emphasized the need for more support for the used EV sector to slow down the rapid pace of depreciation. “Within increasingly volatile market conditions, the strength and consistency of used operations are crucial,” he added.
The trend highlights the challenges facing the electric vehicle market as it continues to grow. While the initial depreciation is steep, the longer-term outlook for used EVs shows some stability. The automotive industry will need to adapt to these changing market dynamics to ensure the continued growth of the EV sector.
