Choosing Your Next Vehicle: Factors to Consider
When it comes to selecting your next vehicle, there are numerous factors that come into play. You might weigh the brand, size, cost, running expenses, reputation, and popularity of the car, among other considerations. Each individual has unique priorities; for some, personal tastes such as design and color take precedence, while others focus on practical aspects like the total cost of ownership from the purchase to the eventual sale of the vehicle. Regardless of your priorities, understanding the resale value of your car is crucial, as it directly influences your ability to afford your next vehicle.
The resale value of a car is essentially the inverse of depreciation, which indicates how much value the car loses over time. Generally speaking, higher-priced vehicles tend to depreciate more rapidly than their less expensive counterparts. This trend is particularly evident in electric vehicles (EVs), which often experience more significant depreciation compared to traditional internal combustion engine vehicles.
Both resale value and depreciation are influenced by a variety of factors, including mileage, age, overall condition, service records, and market demand. In general, cars that are more desirable tend to maintain their value better than those that have known issues or negative perceptions in the market.
Do Electric Vehicles Have Good Resale Value?
Electric vehicles maintained strong resale values until 2022, primarily due to high demand and limited availability. Tesla, the leading brand in the EV market, experienced a unique situation where some owners reported selling their used Teslas for more than their original purchase price. However, in 2023, this trend shifted dramatically when Tesla reduced its vehicle prices significantly.
The pricing of new cars has a substantial impact on the resale value of used cars; buyers are often reluctant to pay more for a used vehicle than they would for a new model, even if the used vehicle initially had a higher price tag. For instance, the Tesla Model X, which cost around $121,000 in late 2022, saw its new price drop to $77,990. Consequently, owners who purchased the Model X in 2022 faced rapid depreciation, with values plummeting by more than 55% within just two years.
In addition to lower new car prices, discounts and incentives for new EVs also play a crucial role in determining the resale value. In the case of the Model X, a $7,500 federal tax credit, along with additional state incentives, makes it challenging to justify asking for $67,000 for a 2022 model when a new version is available for only slightly more.
Are Used EV Prices Falling?
The ongoing debate surrounding the decline in resale value of electric vehicles has produced mixed opinions. Some individuals argue that the drop in resale value could hinder EV adoption, as potential buyers may be discouraged by the prospect of owning a vehicle that depreciates quickly. Conversely, others believe that the reduced prices for used EVs could make them more accessible, accelerating EV adoption. Many who have experienced driving an EV are often reluctant to return to gasoline vehicles, so those purchasing used EVs may eventually seek to upgrade to new models.
For this transition to occur, the used EV market must be robust, which requires a sufficient supply of vehicles. Until recently, this was not the case, as many owners who had invested heavily in their EVs were unwilling to sell. Additionally, the reliability of EVs, particularly Teslas, has led many owners to keep their vehicles longer, especially since Tesla frequently updates its cars with new features via software updates. However, the landscape is changing, with approximately 10% of cars sold in the U.S. now being battery-powered. Another contributing factor to the growing availability of used EVs is that companies are replacing their older electric vehicles. For example, Hertz has sold tens of thousands of Teslas this year and continues to do so, providing a steady stream of well-maintained used EVs at competitive prices.
Research indicates that electric vehicles tend to depreciate faster than any other major vehicle type, losing, on average, over 49% of their value after five years, compared to less than 39% for all vehicles combined. Experts suggest that this trend may persist until EVs no longer require incentives to sell and consumers become more confident in their long-term affordability.
Tesla Model 3
Despite experiencing a decline in its five-year resale value compared to the previous year, the Tesla Model 3 remains at the forefront of resale value rankings. Its popularity stems from its impressive features, competitive pricing, and a healthy supply in the used market. Tesla has recently introduced an updated Model 3 with enhanced features and improved quality, which may influence the resale prices of older models as buyers may be enticed to switch to the newer version. Nevertheless, the used Model 3 continues to attract interest, being the most affordable option from a leading EV manufacturer.
Buyers of a used Model 3 can take advantage of ongoing software updates and new features that Tesla has integrated over time. Additionally, the battery still retains a warranty of three years, boosting buyer confidence. Research suggests that Tesla batteries are designed to last between 10 to 15 years with minimal degradation, and the Model 3 has not encountered any major issues. Although the 2019 Model 3 was a reliable vehicle, looking for a newer version may be beneficial due to numerous upgrades since then.
Notably, Tesla eliminated ultrasonic sensors from the Model 3 in 2022, but recent software updates have significantly improved the car’s performance using only cameras. As older models with ultrasonic sensors cannot benefit from these updates, selecting the model year wisely is essential.
Tesla Model X
While the Model X experienced a significant decline in value due to the price cuts mentioned earlier, it still holds its ground as one of the vehicles with the best resale value after five years. The five-year resale value dropped from 50.1% in 2023 to 44.8% in 2024, a change explained by the fact that a version of the Model X now qualifies for the federal EV tax credit, making new purchases more appealing.
Tesla updated the Model X alongside the Model S in 2021, ensuring that many used models come equipped with the latest features. The refresh included minor exterior changes but introduced substantial enhancements in performance and interior features, along with the addition of the highly sought-after Plaid version, known for its impressive speed. The updated Model X also features the advanced Hardware 4 Autopilot system and sensor package, which Tesla has begun to implement across all its models.
Nissan Leaf
As a pioneer in the electric vehicle movement, Nissan introduced the Leaf in 2011 but has struggled to maintain its momentum in recent years, primarily due to the rapid advancements made by competitors like Tesla. The launch of the second-generation Leaf in 2017 came too late to regain market share, and now its primary selling point is its affordability, with discussions surrounding the potential discontinuation of the model.
The Nissan Leaf played a significant role in shaping perceptions of EV batteries, particularly in the early days when concerns about battery life and replacement costs were prevalent. While the first-generation Leaf suffered from battery cooling issues that led to early failures, Nissan successfully addressed these concerns in the second generation, resulting in more reliable batteries. However, the Leaf’s driving range remains limited, with the 40-kWh version offering only 149 miles and the 60-kWh model providing 212 miles per charge.
Used five-year-old Nissan Leaf EVs can be found starting around $15,000, with an average price of approximately $17,687, making it an attractive option for budget-conscious buyers. With the recent update in 2022 and the potential phasing out of the model, prices may continue to decline as the year progresses.
Hyundai Ioniq Electric
The Hyundai Ioniq Electric has undergone several upgrades while primarily serving as a continuation model. Recent enhancements include automatic high beams, emergency braking, and an improved driver-focused monitor. One standout feature of the Ioniq Electric is its ability to remotely control battery charging through a smartphone app. The car is well-regarded for its charging capabilities, with the ability to charge a phone quickly as well.
In just three years, this popular EV has lost approximately 48% of its resale value. For Canadian buyers, the battery warranty lasts five years, while the battery can reach over 85% charge in under 55 minutes, offering a range of up to 190 miles. The eight-year battery warranty further enhances the Ioniq Electric’s appeal to used electric vehicle buyers.
Chevrolet Bolt EV
Once viewed as a serious contender to Tesla, the Chevrolet Bolt EV has had a tumultuous history, primarily due to faulty batteries supplied by LG. After several reported battery fires in 2021, GM was forced to recall the vehicles, which initially seemed detrimental to the Bolt’s reputation. However, the Bolt has since rebounded and is now GM’s best-selling electric car.
Part of the Bolt’s resurgence can be attributed to significant price cuts, making it the most affordable electric car in the U.S. after August 2022, when Chevrolet slashed the price from $31,500 to $25,600. Although the price was slightly raised in January 2023 to $26,595, it remains competitively priced. A silver lining of the battery recall is that buyers can now find used 2017–2022 Bolt EVs equipped with brand-new batteries.
Due to this increased interest, the Bolt has become harder to find. In June 2023, Chevrolet shifted from replacing batteries in the 2020–2022 Bolt EVs to implementing a diagnostic system to determine battery replacement needs. If you’re considering purchasing a Chevrolet Bolt, be sure to obtain proof of battery replacement. While the Bolt offers an impressive range of 259 miles, its fast-charging capabilities are limited to 50 kW, resulting in slower charging times; for instance, you can expect to gain about 100 miles (161 kilometers) of range after thirty minutes of charging.
Tesla Model S
The Model S was Tesla’s inaugural high-volume electric vehicle and held the title of best-selling electric car until the Model 3 took that position in 2018. Tesla’s success with the Model S demonstrated that electric cars could compete with traditional gas-powered vehicles, particularly in the luxury car segment, and played a significant role in elevating the brand’s profile and increasing interest in EVs.
However, the Model S has not been without its challenges. The 2012–2015 models experienced numerous battery failures, with many issues arising after the warranty period had expired. If you’re considering a used Tesla Model S at a lower price point, it’s advisable to avoid models from those years due to potential reliability concerns. In late 2015, Tesla redesigned the battery, leading to a significant reduction in problems.
In 2021, Tesla unveiled a substantial update for the Model S, introducing the Model S Plaid, which remains one of the fastest and most powerful options available. While the updated Model S boasts advanced technology, its sales have not matched the level of innovation. A contributing factor could be the price cuts made by Tesla in the latter half of 2023, which brought the price down to $74,990, and a subsequent $2,000 drop in April 2024. While these price reductions are advantageous for new buyers, they pose challenges for current owners looking to sell.
BMW i3
Experts regard the BMW i3 as one of the electric vehicles that retains its value well in the resale market, particularly when considering its range. The i3 boasts impressive features such as mobile Wi-Fi and a Driving Assistant, along with many value-added extras, including a distinctive interior with raw eucalyptus wood accents. The i3’s soft leather seats contribute to its stylish and sophisticated appearance, reinforcing BMW’s reputation for intelligent engineering and robust driving performance.
Volkswagen e-Golf
The Volkswagen e-Golf is noted for its efficiency, achieving a range of approximately 200 kilometers on a single charge, according to the EPA. For those exploring used electric vehicles that maintain their value, the e-Golf presents a budget-friendly option, equipped with standard features like heated front seats, Apple CarPlay, and Android Auto. The e-Golf outperforms alternatives such as the Kia Soul EV, Hyundai Ioniq Electric, and Honda Clarity Electric.
Thanks to its XDS Cross Differential System, derived from the sporty GTI hatchback, the e-Golf handles corners exceptionally well, making it an attractive option for buyers seeking both value and performance.
Kia Niro EV
Kia has made significant strides in reliability, earning high marks from sources worldwide. This reputation contributes to the Kia Niro EV’s inclusion on the list of electric vehicles that maintain their resale value. The Niro EV offers buyers a blend of sought-after features and impressive driving range, with high-end amenities such as LED lighting and a Harman Kardon sound system, capable of achieving up to 385 kilometers on a full charge.
Hyundai Kona Electric
The Hyundai Kona ranks among the most popular electric vehicles sold in Canada, with its electric variant offering an impressive range of 415 kilometers on a single charge. Hyundai also produces gasoline versions of the Kona, which share many of the same advantages.
Besides its competitive pricing, Hyundai enhances the Kona’s resale value through its lifetime battery warranty. The Kona Electric is equipped with a host of desirable features, including automatic forward emergency braking, lane-keeping assistance, and pedestrian detection, which are all highly sought-after by used car buyers.