One of the big reasons drivers aren’t more eager to switch to electric vehicles is their premium price tags and a perception of alarming depreciation.
But would you be more open to EV ownership if we told you that there’s a particular sweet spot for when one becomes better value than a petrol car – and then continues to hold its value just as well?
We’ve exclusively teamed up with valuations experts cap hpi to understand how long it takes for electric models to become less expensive to buy and no faster depreciating than a like-for-like with a combustion engine.
And it’s sooner than you might think.
When does an EV become better value for money than an equivalent petrol model? We compare depreciation of like-for-like cars to discover when an electric vehicle will be kinder to your bank account
The analysis compares values of used EVs versus equivalent petrol or hybrid models from the same manufacturer across seven different instances.
We’ve only chosen examples where the head-to-head models are similar in size, body type and power output in order to provide the closest comparison possible.
To ensure accuracy, we’ve only included EVs and petrol/hybrid models that have been on sale simultaneously.
Based on the current climate, the data shows that electric cars suffer the bulk of their depreciation in the first 12 months.
In all the cases we examined, this dropped the used price of the EV below the second-hand value of a one-year-old petrol model.
Thereafter, the year-on-year depreciation is generally at the same rate, meaning EVs will match their combustion counterparts and won’t continue to dramatically fall in price over the following years.
With the vast majority of new EV registrations being fleet purchases – many of which are private buyers utilising salary sacrifice schemes through their employees – it means there are very few who will suffer the first-year depreciation seen here.
By the time fleet contracts end and these models enter the used market, second-hand car buyers can ultimately get better value for money by opting for an EV – granted they have the provisions to charge one at home.
Most car manufacturers offer warranties on EV batteries for eight years (or up to 100,000 miles), meaning extra piece of mind for those considering a second-hand model.
Dylan Setterfield, head of forecast strategy at cap hpi who ran the data for This is Money, says: ‘Surveys of used car buyers still reveal the price of BEVs as being one of the main reasons why drivers are not switching to electric.
‘What many don’t realise is, that not only are the vast majority of models cheaper than petrol or diesel equivalents, and sometimes by thousands of pounds.
‘There is also a significant cost of ownership saving in terms of running costs, especially, but not exclusively, if drivers are able to charge at home.
‘Prices have already come down so far that many models look fantastic value for money, and while this has stimulated demand for those in the know, the majority of used car buyers are completely unaware of the thousands of pounds they could be saving themselves.’
EXAMPLE 1: BMW 4 Series vs BMW i4
PETROL
Model: BMW 4 Series Coupe
Trim: M440i xDrive MHT 2dr Step Auto
Year: 2021
Power: 374bhp
Price new: £59,585
Value after 1yr, 10k miles: £43,400 (-27.2% yoy)
Value after 2yrs, 20k miles: £38,100 (-12.2% yoy)
Value after 3yrs, 30k miles: £33,600 (-11.8% yoy)
ELECTRIC
Model: BMW i4
Trim: 250kW eDrive40 M Sport 83.9kWh 5dr Auto
Year: 2021
Power: 340bhp / Range: 357 miles
Price new: £60,215
Value after 1yr, 10k miles: £37,800 (-37.2%)
Value after 2yrs, 20k miles: £34,200 (-9.5%)
Value after 3yrs, 30k miles: £30,925 (-9.6%)
Our first example compares BMW’s 4 Series Coupe petrol and the i4 EV. Telling them apart is pretty difficult if you haven’t clocked the i4’s flash of green on the number plate and lack of exhaust pipes, so closely related the two vehicles are. Our comparison looks at versions new in 2021.
After the first year, the petrol had shed 27.2 per cent of its original price, while the EV lost 37.2 per cent. As a result, a one-year-old i4 is some £5,600 cheaper to buy than the M440i petrol.
But in year two and three, the i4 depreciates statistically slower than the petrol option.
EXAMPLE 2: Honda Jazz vs Honda e
PETROL HYBRID
Model: Honda Jazz Hybrid
Trim: 1.5 i-MMD Hybrid EX 5dr eCVT Auto
Year: 2020
Power: 109bhp
Price new: £25,080
Value after 1yr, 10k miles: £18,450 (-26.4% yoy)
Value after 2yrs, 20k miles: £17,100 (-7.3% yoy)
Value after 3yrs, 30k miles: £15,875 (-7.2% yoy)
Value after 4yrs, 40k miles: £14,700 (-7.4% yoy)
ELECTRIC
Model: Honda e
Trim: 113kW Advance 36kWh 5dr Auto
Year: 2020
Power: 154bhp / Range: 131 miles
Price new: £37,340
Value after 1yr, 10k miles: £16,500 (-55.8% yoy)
Value after 2yrs, 20k miles: £14,750 (-10.6% yoy)
Value after 3yrs, 30k miles: £13,225 (-10.3% yoy)
Value after 4yrs, 40k miles: £11,825 (-10.6% yoy)
If you wanted a small new Honda in 2020, the options available to drivers were the Jazz hybrid and Honda e EV, with the latter costing £7,000 more for a comparable spec.
However, by the end of the first year, the Honda e’s value is below that of its hybrid counterpart.
For the following three years, the Jazz is somewhat slower to depreciate. As such, by the time it reaches four years old and having accumulated 40,000 miles, the Honda e is some £2,800 less expensive than its in-house combustion engine rival
EXAMPLE 3: Kia Niro Hybrid vs Kia e-Niro
PETROL HYBRID
Model: Kia Niro Hybrid
Trim: 1.6 GDi Hybrid 3 5dr DCT Auto
Year: 2020
Power: 139bhp
Price new: £27,890
Value after 1yr, 10k miles: £20,150 (-27.8% yoy)
Value after 2yrs, 20k miles: £18,200 (-9.7% yoy)
Value after 3yrs, 30k miles: £16,475 (-9.5% yoy)
Value after 4yrs, 40k miles: £14,875 (9.7% yoy)
ELECTRIC
Model: Kia e-Niro
Trim: 150kW 3 64kWh 5dr Auto
Year: 2020
Power: 201bhp / Range: 282 miles
Price new: £37,395
Value after 1yr, 10k miles: £18,150 (-51.5% yoy)
Value after 2yrs, 20k miles: £16,150 (-11.0% yoy)
Value after 3yrs, 30k miles: £14,850 (-8.0% yoy)
Value after 4yrs, 40k miles: £13,225 (-10.9% yoy)
Kia’s Niro is an easy car to compare in this study; it was available in 2020 with the choice of conventional hybrid, plug-in hybrid or fully electric variants.
The EV shed over 51 per cent of its new price in the first 12 months, while the self-charging hybrid only depreciated by 28 per cent. As such, the EV – which would have been a £10,000 premium to buy new – becomes less expensive to buy after one year.
But there is some deviation in depreciation in the years that follow, with cap hpi’s data – based on dealer sales and auction prices – showing the EV falling in value only marginally more in year two and four, but slightly less in the third year.
EXAMPLE 4: Mercedes GLA vs Mercedes EQA
PETROL
Model: Mercedes-Benz GLA
Trim: GLA 250 AMG Line 5dr Auto
Year: 2022
Power: 224bhp
Price new: £37,305
Value after 1yr, 10k miles: £29,350 (-21.3% yoy)
Value after 2yrs, 20k miles: £26,850 (-8.5% yoy)
ELECTRIC
Model: Mercedes-Benz EQA
Trim: EQA 250+ 140kW AMG Line 70.5kWh 5dr Auto
Year: 2022
Power: 190bhp / Range: 331 miles
Price new: £51,995
Value after 1yr, 10k miles: £26,550 (-48.9% yoy)
Value after 2yrs, 20k miles: £23,950 (-9.8% yoy)
Given the Mercedes-Benz EQA didn’t arrive until 2021, we’ve only been able to track its value retention against the petrol GLA over a two-year period.
While the GLA shed 21 per cent of its original £37,305 new price in year one, the electric EQA loses half of its £52,000 RRP. As such, the EV option is the cheaper year-old second-hand motor.
Year two depreciation is far closer, with the petrol losing 8.5 per cent year-on-year versus the EV’s 9.8 per cent.
EXAMPLE 5: Skoda Kodiaq vs Skoda Enyaq
PETROL
Model: Skoda Kodiaq
Trim: 2.0 TSI 190 Sport Line 4×4 5dr DSG [7 Seat] Auto
Year: 2021
Power: 190bhp
Price new: £43,235
Value after 1yr, 10k miles: £31,800 (-26.4% yoy)
Value after 2yrs, 20k miles: £28,750 (-9.6% yoy)
Value after 3yrs, 30k miles: £26,025 (-9.5% yoy)
ELECTRIC
Model: Skoda Enyaq iV
Trim: 150kW 80 Sportline 82kWh 5dr Auto [125kW]
Year: 2021
Power: 204bhp / Range: 324 miles
Price new: £44,465
Value after 1yr, 10k miles: £29,000 (-34.8% yoy)
Value after 2yrs, 20k miles: £26,200 (-9.7% yoy)
Value after 3yrs, 30k miles: £23,725 (-9.4% yoy)
Skoda’s Kodiaq SUV versus the Enyaq iQ EV is a great like-for-like comparison across petrol versus electric, with the two specs we’ve chosen being available simultaneously in the Czech brand’s showrooms for the last three years.
The new price and power output for the two variants selected for our study are also relatively close.
And, interestingly, the Enyaq iV’s first-year depreciation is relatively closer to that of its petrol counterpart than other examples we’ve seen. Thereafter, it’s almost neck-and-neck in terms of loss in value. As a result, after three years the petrol Kodiaq is only £2,300 pricier than the Enyaq used.
EXAMPLE 6: Vauxhall Corsa vs Vauxhall Corsa-e
PETROL
Model: Vauxhall Corsa
Trim: 1.2 Turbo GS Line 5dr Auto
Year: 2022
Power: 130bhp
Price new: £24,220
Value after 1yr, 10k miles: £15,000 (-38.1% yoy)
Value after 2yrs, 20k miles: £13,300 (-11.3% yoy)
ELECTRIC
Model: Vauxhall Corsa-e
Trim: 100kW GS Line 50kWh 5dr Auto [11kWCh]
Year: 2022
Power: 136bhp / Range: 222 miles
Price new: £34,025
Value after 1yr, 10k miles: £12,500 (-63.3% yoy)
Value after 2yrs, 20k miles: £11,100 (-11.2% yoy)
The Vauxhall Corsa petrol and Corsa-e have a very significant gulf in list price; the EV is a £10,000 premium in dealers, which is a whopping amount for what should be a small, affordable car. That said, buyers typically don’t pay list price in Vauxhall showrooms.
The Corsa-e’s first year depreciation is significant, at a massive 63 per cent, according to cap hpi. However, the standard Corsa’s initial 12-month loss of value is pretty shocking too, at 38 per cent.
However, by year two, the Corsa-s’s rapid decline in cost levels out. In fact, it sheds slightly less of its value in the second year compared to the combustion model.
EXAMPLE 7: Volkswagen ID.3 vs Volkswagen Golf
PETROL
Model: Volkswagen Golf
Trim: 1.5 eTSI 150 Style 5dr DSG Auto
Year: 2021
Power: 150bhp
Price new: £32,915
Value after 1yr, 10k miles: £21,800 (-33.8% yoy)
Value after 2yrs, 20k miles: £19,500 (-10.6% yoy)
Value after 3yrs, 30k miles: £17,475 (-10.4% yoy)
ELECTRIC
Model: Volkswagen ID.3
Trim: 110kW Style Pure Performance 45kWh 5dr Auto
Year: 2021
Power: 150bhp
Price new: £34,945 / Range: 216 miles
Value after 1yr, 10k miles: £16,800 (-51.9% yoy)
Value after 2yrs, 20k miles: £15,150 (-9.8% yoy)
Value after 3yrs, 30k miles: £13,750 (-9.2% yoy)
Our final comparison is a popular petrol versus electric duel between VW’s iconic Golf and the Golf-sized ID.3 from the brand’s battery-car vehicle range.
List prices for the comparable 2021 models in our research are pretty close, separated by just £2,000 with a premium for the EV. However, depreciation of 52 per cent in year one sees the price of a year-old second hand ID.3 drop £5,000 below the Golf.
However, in years two and three, cap hpi’s data shows the ID.3 depreciates slower than the Golf, with the price difference after 36 months dropping to £3,725 for examples with the same mileage.
Richard Walker, director of data and insights at Auto Trader, tells us he is seeing price parity with used EVs and petrols after three years
Auto Trader: EV price parity achieved after three years
Auto Trader has been tracking values of EVs against petrol and diesel models based on its own data – which is the advertised price of circa 800,000 second-hand motors.
The used car market place says that brand-new EVs generally cost around a third (33 per cent) more than an equivalent zero-mile combustion new car, but ‘pricing trends’ seen in 2023 (namely the surge in available second-hand EVs entering the market from finance and lease contracts ending) means there is price parity between battery vehicles and petrol models after three years.
‘A good example of this is the Tesla Model 3 versus the BMW 3 Series (petrol), and the Jaguar I-Pace vs the Jaguar F-Pace (petrol), all of which are equally priced brand new,’ Auto Trader told us.
‘Last month, the average price of a three-year old Model 3 cost £22,400, while a 3 Series of the same age, was nearly £2,000 more expensive (£24,300). A three-year old Jaguar I-Pace EV cost £23,400 in June, while the petrol F-Pace was more than £10,000 more expensive (£33,500).’
As a result, Auto Trader says it has seen a sharp rise in demand for three-year-old EVs.
While searches for EVs of all ages were up 70 per cent year-on-year in June, for three-to-five-year-old EVs, it was 175 per cent higher. In contrast, demand for petrols and diesels in these age brackets were up 9 per cent and down 10.3 per cent respectively.
EVs are selling quicker too; in June, a three-to-five-year-old electric vehicle took just 22 days to shift, which was a week faster than the rest of the market as a whole (29 days).
Richard Walker, director of data and insights at Auto Trader, tells us he expects used EV prices to come down a little more as supplies of the latest models begin to enter what was previously a sparse second-hand electric car market.
‘The health of the used EV market is very robust at the moment, with near record levels of consumer demand,’ Walker explained to us.
‘That’s because car buyers are benefitting from a compelling combination of more choice and improving affordability, particularly for those models around the three-to-five-year-old mark, which are currently selling faster than any other used car.
‘Three-to five-year-old electric cars are at price parity following last year’s corrections, and with the current very healthy balance between supply and demand, they represent great value.
‘There could be a little further softening on some models as more supply enters the market, but the main hit was last year and since then prices have been stable and at a level offering real benefit to drivers looking to make the switch.’
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