The Debate Over Electric Vehicle Depreciation
A recent TikTok video from a San Jose car salesman has sparked a conversation about the financial implications of buying new electric vehicles. In the video, the salesman questions whether consumers would still purchase a new electric vehicle if they knew it could lose a significant portion of its value within the first year.
The video, posted by a Southern California car dealership on October 6, suggests that electric vehicles depreciate more rapidly than traditional gasoline-powered cars. The salesman’s message is clear: it might be wiser to consider used electric vehicles instead of new ones.
A Bold Claim About New EVs
The salesman highlights the performance of the Tesla Model 3 Performance, noting its impressive 0 to 60 mph acceleration time. However, he raises a critical question: “Would you still buy the car if you knew that it\’s gonna be worth 40% less within the first year?”
He expands on this point, stating that the depreciation issue isn’t exclusive to Tesla models. For example, he mentions the Lucid Air Grand Touring, which starts at $100,000 and can drop to about half its value within two years. This example illustrates the broader concern about the long-term value of electric vehicles.
The Cost-Saving Illusion
While the initial cost-saving benefits of purchasing a new electric vehicle may seem appealing, the salesman argues that these advantages are overshadowed by the depreciation that occurs in the early years. He explains that while consumers might receive rebates, free charging, or other incentives, these benefits are relatively small compared to the loss in value.
“Those free things that you get from the manufacturer are peanuts compared to the depreciation that you get within the first few years,” he says.
The Case for Used Electric Vehicles
The salesman then shifts his focus to promoting used electric vehicles. He claims that for around $30,000, buyers can get a car with impressive performance, such as a 0 to 60 mph time of under three seconds. This pitch seems to align with the idea that used EVs offer better value for money.
However, many commenters on the video expressed skepticism about the salesman’s motives. Some suggested that his comments were simply a way to push sales of used vehicles rather than a genuine concern about depreciation.
Public Reaction and Skepticism
The comments section of the video reflects a range of opinions. One top commenter wrote, “Dude cars aren’t investments….” Another added, “All automobiles are depreciating assets.” These responses highlight the general understanding that all vehicles lose value over time.
Many users also questioned the validity of the salesman’s claim that electric vehicles depreciate faster than other vehicles. One user stated, “So it depreciates 30-40% like any other car.”
Understanding Depreciation Rates
There is no definitive consensus on the average depreciation rate for new cars, as it can vary widely depending on the type of vehicle and market conditions. According to Experian, new cars typically lose about 16% of their value in the first year and another 12% in the second year. By the end of the fifth year, they may retain only 45% of their original value.
Despite this, some experts suggest that electric vehicles tend to depreciate more quickly than traditional vehicles. An iSeeCars report cited by Bankrate found that trucks have an average five-year depreciation rate of around 40%, while electric vehicles depreciate by nearly 60% in the same period.
Conclusion
The debate over electric vehicle depreciation continues to evolve. While some argue that the high depreciation rates make new EVs a poor investment, others believe that the long-term savings on fuel and maintenance can offset this loss. As the market for electric vehicles grows, so too will the discussion around their value and longevity.
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