Electric vehicles (EVs) are the talk of the town because of their usage cost-effectiveness and overall benefits. But here’s the buzzkill: just like smartphones and other gadgets, EVs suffer from a sneaky problem, of rapid depreciation, or reduction in the value of the electric vehicle.
Electric Vehicles(EV) Depreciation is the decrease in an electric vehicle’s value over time, influenced by factors such as age, mileage, and technological advancements. Currently, most of the electric vehicles in India exhibit an average annual depreciation exceeding 20%.
Popular cars like the Tata Nexon EV, and MG S EV Exclusive showcase an average annual depreciation rate of 49.9%, and 46.2% respectively. It can be calculated using the formula:
- Depreciation Rate = (Initial Cost of EV – Residual Value) / (Initial Cost of EV) X 100
Like every EV owner, you must be conscious by now. Not to worry we have included 7 unknown factors which affect EV depreciation and can help you to maintain it.
Let’s uncover some of the major factors that greatly impact the depreciation and resale value of electric vehicles:
1. Battery Health
The battery is the superhero heart of the electric vehicle. It powers everything, from your morning coffee run travel to your weekend escape. A healthy battery means higher resale value from potential buyers. But poor battery health is like a deflated balloon with less value. Because of this, the car’s depreciation value goes up faster than a squirrel in traffic.
2. Overall Mileage Driven
In the EV world, mileage is indicative of extreme use. High mileage? Buyers raise their eyebrows faster than a racecar at the finish line. Low mileage? It attracts potential buyers. So, take the scenic route, but keep those odometer digits low.
3. Vehicle Condition
EVs with too many scratches, dents, and faded paint? That’s a big turn-off for potential buyers. Regular cleaning, and maintenance, can slow down depreciation. Remember, appearances matter. Your EV should be the Lamborghini of the used car lot.
Also Read: Ultimate Guide to Electric Vehicles Depreciation
4. Brand Reputation and Demand
Tata Nexon EV and Mahindra XUV400 are the resale king, while lesser-known brands are still facing huge resale value losses. Reputation matters. Buyers trust second-hand cars from established names like they trust grandma’s secret cookie recipe. So, if your EV is from a company that screams “Reliability,” the depreciation rate is low.
5. Service History
Documented service history is like your EV’s resume. Buyers want to know if it’s been serviced properly at the authorized service center. Think of it as a luxury spa day for your car. Regular check-ups, oil changes, and software updates affect resale value drastically. Trust me, buyers will notice. And lower depreciation rates will give you a higher resale value.
6. Government Policies and Incentives
Governments play the EV depreciation game too. Incentives such as FAME vanish faster than free samples at malls. Reduced incentives? older EVs lose their resale value significantly. and with incentives and subsidies in place the vehicles are in demand, hence a great resale value.
7. Technological Advancements
New EVs launch with better batteries, longer ranges, and faster charging making the older EV models less desirable compared to their newer counterparts. It’s like upgrading from a flip phone to an iPhone 42. New updates reduce the resale value of cars with old technology significantly.
Remember, depreciation is not a bad thing it’s just part of the EV ownership journey. So, charge up, polish that dashboard, and keep your EV’s value cruising. Understanding these factors can help you make smarter decisions when buying, maintaining, and selling your electric vehicle.