Electric cars are beginning to trickle into the mainstream, and one factor that potential electric-car buyers will need to think about is residual value (a car's resale value). Potential buyers might be focused more on factors like range, price, and tax incentives, but residual value will become important when it's time to sell.
Automotive pricing services Kelley Blue Book (KBB) and ALG have both found that the Nissan Leaf electric car and the Chevrolet Volt extended-range electric are lagging behind similar gas-powered cars in residual value, although the contrast isn't too stark.
For example, Kelley Blue Book compared the Leaf with the similarly sized Nissan Sentra, finding the Leaf would be worth 20 percent of its original cost after five years while the Sentra would be worth around 30 percent. For the Volt, KBB found it to be worth 30 percent after five years, while Chevy's conventional Cruze compact would be worth 38 percent. ALG's numbers were similar, bumping the values up one percentage point for both the Leaf and the Volt. According to ALG, the average resale value over five years for a conventional compact is 36.6 percent of original cost.
There are several factors for this. One is that the federal tax credit of $7,500 lowers the initial sticker price of a new electric car, there making it worth less as a used car, since the initial sticker price is now lower. The relative infancy of electric-car infrastructure likely plays a part, as does the adjustment to the shorter range in between charges of an electric car (as compared to the range between fill-ups in a gas car) and the necessary changes in commuting habits. And according to one analyst, the rapidly changing pace of technology affects resale value, too.
"Consumers are classifying plug-in vehicles as more of a piece of technology than a mode of transportation in the used market," Dave Sullivan, manager of product analysis at industry analyst firm AutoPacific, said.
"Like any piece of electronics, obsolescence happens at a rapid rate and consumers are nervous that they'll be left with something that isn't the latest and greatest. This shows through the residual values."
While this might be bad news for those who buy a new electric car, it could work to the advantage of buyers who want an electric car on the cheap.
"For someone who was put off by the high price of entry for an electric vehicle, a 'relatively new' used electric vehicle might be the way to go," Sullivan said.
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