How Resale Value Works for EVs vs. Gas Cars

When you buy a car, one of the biggest long-term costs is depreciation – the loss of value over time. Resale value, or what you can sell the car for later, is where electric vehicles have differed notably from traditional gas-powered cars. In this article, we’ll explore how resale value works for EVs versus gas cars, why EVs historically depreciate faster, and what that means for owners. Whether you’re an EV owner concerned about your car’s value or a potential buyer weighing an EV vs. a gas car, understanding these dynamics will help you make an informed decision.

The Basics of Depreciation

All vehicles depreciate as they age, but the pace and pattern can vary. Typically, a new car (gas or electric) loses the largest chunk of its value in the first few years. After about 5 years, many gas cars have lost roughly 50% of their new value (exact figures vary by make/model). Depreciation is driven by factors like mileage, age, condition, reputation for reliability, and market demand for that model. Resale value also takes into account total cost of ownership – if a car is expensive to maintain or fuel, it might have lower demand used.

Electric vehicles, however, have introduced new wrinkles into the depreciation equation. EV resale values have been more volatile and generally lower relative to purchase price than those of comparable gas cars. Let’s dig into why.

EVs Depreciate Faster – Here’s Why

Multiple studies and real-world data show that EVs tend to depreciate significantly faster than gas cars. For example, a UK analysis found that after 3 years, the average EV had lost over half its value, compared to about 39% loss for a petrol car of the same age[13]. In the U.S., early EV models sometimes lost as much as 60% of their value within five years[30]. This is a stark difference. Some concrete illustrations from 2023–2025 used car values:

• A 2023 Tesla Model Y purchased new in 2023 lost about 42% of its value in two years by 2025, according to Kelley Blue Book data[14]. In contrast, a 2023 Ford F-150 (gas pickup) lost only ~20% in the same period[14].
• Older first-generation EVs (think 2011 Nissan Leaf or early BMW i3) depreciated extremely fast – often worth very little after 8–10 years, sometimes under 20% of their original price. Meanwhile, a well-kept 10-year-old Honda Civic (gas) might still retain ~30%+ of its new value.

Why do EVs depreciate faster? A few key reasons:

1. Technological Rapid Improvement: EV technology (especially batteries) has been advancing quickly year to year. Newer EV models often have significantly better range, faster charging, and updated features compared to 3-5 year old models. This leapfrogging makes older EVs look outdated sooner. A 2018 EV with 150-mile range may struggle on the used market in 2025 when similarly priced new EVs offer 300-mile range. Gas cars, by contrast, haven’t seen such revolutionary improvements in short spans – a 5-year-old gas car’s performance and fuel efficiency aren’t dramatically behind a new one, so it holds value better.

2. Tax Incentives and Discounts: Many new EVs have been sold with government incentives – for instance, the U.S. federal EV tax credit (up to \$7,500) often effectively reduces the initial purchase price[31][30]. State rebates or manufacturer incentives (like price cuts or free charging) also sweetened new EV deals[32][33]. This means the effective new price** was lower, and subsequent owners factor that in. A used buyer won’t pay near-new price if they know the original owner got a big credit or rebate. This drags down used prices. (Notably, the federal tax credit was set to end for EVs purchased after Sept 30, 2025[21], which may influence future depreciation patterns differently.)

3. Battery Uncertainty: The battery pack’s health is a big question mark for used EVs. Prospective buyers worry about diminished range or expensive battery replacement if the pack is worn out. Since the battery’s condition isn’t as easily apparent as, say, an engine’s (and a new battery can cost many thousands of dollars), buyers hedge by valuing used EVs lower[34]. It’s a new mindset – with gas cars, buyers and dealers have decades of data to predict an engine/transmission’s longevity and value at certain mileage. With EVs, early adopters and dealers were not sure how to value a 5-year-old battery, so prices fell more to attract buyers wary of being “the one” to foot the bill for a new pack.

4. Lower Demand in Used Market (Until Recently): In the past, the pool of used EV shoppers was small. Many EV buyers wanted the newest models for maximum range and features, and overall EV market share was low – so there just weren’t as many people looking for second-hand EVs. A limited demand meant lower resale values. A 2016 analysis might have shown, for example, a 3-year-old Nissan Leaf’s resale demand was tepid, so its price sank accordingly. This is changing as more mainstream consumers consider used EVs (especially as affordable second cars or for teen drivers, etc.), which could buoy values.

5. Feature Expiration and Software Updates: Some older EVs lose certain perks over time – e.g., free fast-charging incentives not transferring to second owner, or 3G-connected services in early EVs becoming obsolete as networks shut down. Gas cars don’t really lose functionality with age in the same way (aside from wear and tear). This can be a minor factor making older EVs less appealing unless retrofits or updates are done.

Gas Car Resale: More Predictable Patterns

Gasoline cars, on the other hand, have a century of market behavior to draw on[35]. People generally know that a Toyota Camry or Ford F-150 will hold its value relatively well, while a larger luxury sedan might depreciate more. There’s confidence in the used gas car market – for example, a 5-year-old Civic with 60k miles can be appraised based on lots of historical data of similar cars. Engine and transmission life are well understood. There’s no single component like a battery that dominates the residual value; instead, it’s an array of factors (engine condition, mileage, etc.). Gas cars also benefit from the fact that a used buyer can run a pre-purchase inspection and pretty well gauge the car’s remaining life (a mechanic can spot engine issues, leaks, etc.). With an EV, the equivalent – a battery state-of-health report – hasn’t been standard until recently, so it felt like a bit of a gamble.

Resale stability: Gas cars tend to have a steadier depreciation curve. Many gas models lose ~15-20% in the first year, ~50% by year 5, then slow down in depreciation from years 5-10. Certain models like trucks and popular SUVs might depreciate even less (as seen with the F-150 example above). And in unusual times (e.g., in 2021-2022’s used car market boom), some used gas cars even appreciated or held value exceptionally well – something hardly seen with EVs of the same period.

Another aspect: gas cars currently have universal refueling infrastructure. A used gas car in a rural area is just as usable as one in a city – there’s no range or fueling limitation that would make a buyer hesitate. By contrast, a used EV’s appeal can depend on the buyer’s access to charging. In areas with sparse charging, used EV demand might be low.

The Turning Point: Improving EV Resale Prospects

The outlook for EV resale value isn’t all bleak. As EVs become more mainstream, some factors depressing resale are starting to ease:

• Better Battery Longevity Data: We now know that many EV batteries last longer than feared. For instance, Tesla batteries often retain ~90% capacity after 100,000 miles. Nissan improved battery chemistry in later Leafs to reduce early degradation. As consumers learn that an 8-year-old EV can still be perfectly functional for daily use (just with somewhat less range), confidence in used EVs grows, which should help values. Indeed, industry experts note that as more used EVs hit the market with transparent battery health reports, “nobody really knows what electric cars are worth” initially, but more data will bring certainty[15]. Startups like Recurrent are providing battery condition reports to bring transparency to the secondhand EV market[36].

• Stabilizing Technology: The pace of improvement might slow as the tech matures. By 2025, many new EVs already exceed 250-300 miles of range, which is sufficient for most – future increments might not sway buyers as drastically. If a 3-year-old EV has 250 miles range and a new one has 300, that 3-year-old model might hold value better than early models did against newer ones with huge range gaps.

• Market Demand and Gas Uncertainty: EV demand is rising, and more used car shoppers will be considering EVs especially as first owners upgrade. Meanwhile, gas car resale could face its own challenges in the long run. Some analysts speculate that as EV adoption increases and more jurisdictions announce future bans on new gas car sales, residual values of gas cars could eventually suffer (though in the near term, gas cars still have a broader used market demand)[37]. It’s possible that a glut of used gas cars in 5-10 years, combined with falling new EV prices, could make gas car depreciation worse than historical norms[38]. We already see hints of this in some markets: for example, used car inventories swelling with off-lease gas SUVs might push prices down if more buyers pivot to electric.

• Retention of Incentives: Since the U.S. federal EV credit will no longer apply to vehicles bought after late 2025 (unless new legislation is introduced)[21], new EV prices effectively rise (all else equal). This could ironically help used EV values – with no \$7,500 discount on new, a one-year-old used EV might be more competitively priced relative to new. Some states are also introducing their own incentives to prop up EV sales (e.g., Colorado increasing state EV rebates) which could indirectly influence supply and pricing of used EVs[39]. How this plays out remains to be seen.

• Leasing and Fleet Impacts: Many EVs have been leased, and their residual values are set by leasing companies. Initially, lease residuals on EVs were set low (anticipating high depreciation), which made lease payments higher. But as data comes in, we might see lease residuals adjust. Large fleet turnovers (like rental car companies going big on EVs) can temporarily flood the used market – e.g., Hertz’s bulk buy of Teslas later resulted in thousands of slightly used Teslas for sale at once, pushing prices down[40]. Those are short-term distortions. Over time, the used EV market will absorb such supply if demand catches up.

Tips for Owners: Maximizing Resale Value

If you own an EV and resale value is a concern, here are a few tips akin to those for gas cars, plus some EV-specific ones:

• Take care of the battery: Follow good charging practices to preserve battery health (avoid habitually charging to 100% or letting it drain to 0%, minimize exposure to extreme heat, etc.). A healthy battery means better range at sale time, which is a strong selling point. If possible, obtain a battery health report before selling – showing a prospective buyer that your EV’s battery still has, say, 90% of original capacity can justify a higher price.

• Keep service records: Even if EVs have less maintenance, document whatever you do (tire rotations, brake service, battery coolant changes if required, any warranty work). It reassures buyers that the car was cared for like any other.

• Market at the right time: The used EV market can fluctuate. If new EV prices drop (or huge incentives are introduced), it can hurt your timing. Conversely, when gas prices spike, demand (and prices) for used EVs often rise as people seek fuel-efficient options. Local factors matter too – in areas with EV incentives or HOV privileges, used EVs fetch more. Nationally, EV tax credit changes have big impacts; e.g., in early 2023 when many EVs suddenly became eligible for credits, some nearly-new used EVs had to be discounted because buyers preferred new-with-credit. Keep an eye on such trends.

• Consider trade-in vs. private sale: Sometimes dealerships (especially of the same brand) may offer strong trade-in values if you’re buying another car, since they might certify and resell your EV. But often, selling privately yields more. Because EVs are newer tech, a private buyer who understands its value might pay more than a dealer who is conservative about auction prices. Be prepared to educate buyers about your car’s features and savings (e.g., “you’ll spend \$X less on fuel annually”) – this can help justify your asking price.

For buyers comparing EV vs gas, resale value is one piece of the total cost puzzle. Yes, many EVs depreciate more in percentage terms, but remember that EVs often start pricier. Some of the depreciation is offset by fuel/maintenance savings. For example, even if your EV loses an extra \$2,000 in value over 5 years compared to a similar gas car, you might have saved \$3,000 in gas and maintenance in that time. So from a cost perspective, you could still come out ahead. It’s wise to look up specific models on used car value guides (KBB, Edmunds) to see 3-5 year old values and trends. Some EVs, like certain Tesla models, have held value relatively well (sometimes surprisingly well in short term, due to high demand and software updates keeping them fresh). Others, like economy EV models with shorter range, may be super cheap used – which is great if you’re buying one, less great if you bought it new.

The Bottom Line

Resale value for EVs has historically been lower and more uncertain than for gas cars, primarily due to rapid tech improvements and concerns about battery life[34]. Gas cars have enjoyed more stable and predictable value retention. However, as EV technology matures and public confidence grows, the gap in depreciation rates may narrow. We’re already seeing the EV resale landscape evolve by 2025: more data on long-term battery performance is reassuring used buyers, and more people are open to buying second-hand EVs for the right price.

If strong resale value is crucial to you and you’re deciding between an EV and a gas car, do a model-by-model comparison. A hybrid approach some consumers take is leasing an EV – this shifts the depreciation risk to the lease company, and you can easily upgrade to new tech every few years. Others purchase EVs with the intention to “drive it into the ground,” effectively getting full value through usage rather than resale.

In any case, the general rule stands: buy a vehicle that meets your needs and budget. If an EV delivers big savings and a great driving experience now, a bit of extra depreciation is not necessarily a deal-breaker. And if you’re selling an EV, highlight its remaining benefits (fuel savings, lower maintenance, any remaining warranty) to get the best value. As the market adjusts, both EV and gas car owners will need to stay informed – the automotive world is changing, and resale values will change with it.

This is the end of this article.