Electric Vehicles Lose Half Their Value in Two Years
Electric vehicles (EVs) are depreciating at an alarming rate, retaining only 49% of their value after two years of ownership. This represents a sharp decline from 83% in 2022, according to Cox Automotive. For a new EV purchased at £40,000, this translates to a value of just £19,600 after 24 months, compared to an average retention of 70% for diesel and petrol cars.
The rapid depreciation of ‘nearly-new’ EVs is driven by aggressive price-cutting by manufacturers aiming to meet government-mandated net zero sales targets. The UK government’s zero emission vehicle (ZEV) rules require 28% of new car sales to be electric this year, rising to 80% by 2030. The increasing availability of cheaper EV models is also contributing to the falling resale values.
According to Autotrader, the average price of a second-hand EV dropped from £39,849 to £24,908 between April 2022 and April 2025. Philip Nothard of Cox Automotive Europe noted that while used-car prices peaked in 2022 due to pandemic-related supply shortages, the current depreciation rate for nearly-new EVs is still lower than expected.
The heavy discounts on new EVs are making brand-new models as affordable as nearly-new ones, reducing the incentive for consumers to purchase used EVs. In contrast, ‘middle-aged’ EVs (three to five years old) are faring better, with prices falling by only about 15% when sold at auction.
“The used market is a crucial source of profitability for the automotive sector. More support for the used EV sector is needed to put the brakes on the rapid pace of depreciation.”
- Philip Nothard, Cox Automotive Europe
The Society of Motor Manufacturers and Traders reported that car manufacturers offered £4 billion worth of price cuts on new cars last year, averaging £11,000 per vehicle. While discounting is common practice, EVs have seen higher discounts than petrol and diesel cars.
The accelerated depreciation is causing concern among fleet operators, such as car rental companies, which typically buy new vehicles and sell them after two to three years. The British Vehicle Rental & Leasing Association (BVRLA) warned that rising depreciation costs could force leasing companies to raise consumer prices to protect lenders from losses.
The BVRLA has called for government intervention through market stimulus measures, including potential VAT cuts or grants for used car buyers. As the automotive industry navigates increasingly volatile market conditions, supporting the used EV sector is crucial for maintaining profitability.
