This year in an industry first, late-model used electric vehicles held their value better than the market as a whole, according to Black Book, although only briefly. Alex Yurchenko, chief data science officer for Black Book, speculated higher gasoline prices made a difference.
However, there’s been a “very steep drop” in the percent of sticker price held by 2- to 4-year-old EVs, Yurchenko told the Auto Finance Summit on Oct. 28. Black Book data indicates this started in July, about a month after a slightly milder plunge in retention began among all vehicles. By October, late-model EVs had fallen below the market in the percentage of value held.
The reversal, which began this spring, is an example of what Black Book and Yurchenko’s fellow Auto Finance Summit panelists suggested would be closer parity between the ability of gasoline and electric vehicles to hold their value.
Kristen Lanzavecchia, director of industry solutions for J.D. Power, said the company’s residual value forecast for EVs has “come up a lot,” with prices approaching 50 percent of sticker compared with the mid-50 percent seen on internal combustion engine vehicles.
“It’s a pretty high number,” she said.
New EVs competing with Tesla in the premium segment show “a lot of positivity” on residual values, while even mainstream EVs from manufacturers such as Hyundai are competitive, she said.
Lanzavecchia said a “scarcity premium” also will buoy used EV values until supply catches up with demand.
Black Book estimates the average of all 3-year-old vehicles will fall from 73 percent of sticker in October to 61 percent in October 2025; pre-pandemic, the value had been in the 50 percent range.
The average 3-year-old EV never broke 35 percent of sticker that month pre-pandemic, according to Black Book. But 3-year-old models held 66 percent of sticker price in October and are expected to keep 55 percent in October 2025, according to the company.
Jeremy Robb, Cox Automotive senior director of market insights and business solutions, said recent EV leases anticipate comparable value retention to gasoline-powered models.
Three-year contracts on 2022 models are being written with 66 to 67 percent residual values when the leases end in 2024 and 2025, according to Robb.
“We’re seeing the same thing for EVs,” he said. EV leases for the 2022 model year set residuals at 64 to 65 percent sticker, he added.
“That’s pretty high,” Robb said.
Lanzavecchia said EVs have made up about 5 percent of the market this year, and J.D. Power expects this share will double in the next two years.