What cars depreciate fastest: petrol, diesel or electric?

 

Cars are expensive, right? When we purchase a new car, we’ll factor in the running costs and purchase price into our monthly budget, but we don’t necessarily think about depreciation. It may be wise to though, with the electric car boom approaching.

But what does that mean for the EVs (electric vehicles) of today? Many people considering the switch to electric are likely to ask whether it will depreciate faster, slower, or not at all when compared to an ICE (internal combustion engine) car.

In short,  it seems petrol cars are depreciating fastest, with diesel cars close behind. Electric cars holding most of their original value when compared against petrol or diesel. Let us break it down for you – we’ll start by helping you understand depreciation as a concept.

What is depreciation?

Depreciation is the difference between what you paid for an asset (which in this case is the car) vs the amount you sell or trade it in for.

While some assets like gold, your home, fine wine, or even classic cars tend to increase in value over time, because of their rarity or other factors, most cars gradually lose their value the longer you own it.

The AA say that depreciation is ‘a driver’s biggest cost after fuel purchase’ when buying a new car, so it’s something to take very seriously indeed.

They also say that the average car doing 10,000 miles a year, will have lost around 60% of its original value by the end of the third year.

But it’s not that simple.

What affects depreciation?

To be honest, an awful lot! But here’s a few things to bear in mind if you’re worried about how much your car will be worth in the future:

  1. Mileage. The more miles on your car, the less it’ll be worth.
  2. Brand reputation. If the manufacturer of your car has a poor reliability record or isn’t as desirable as other brands, your car will likely depreciate faster.
  3. Service history. If you can prove your car has been well looked after in previous lives with a fully stamped service booklet, it’ll be worth far more than a car with no history to its name.
  4. Size. The demand for large SUVs (for example) is huge, but they’re expensive to run and costly to purchase in the first place. The higher cost price of a car, the further it has to fall.
  5. Economy and emissions. There’s a larger pool of buyers looking for smaller, cheaper-to-run cars right now because of the various cost-of-living rollercoasters we’re navigating. Plus, lots of us are trying really hard to do our bit for the planet. So, if your car is a big, dirty gas guzzler that pumps out toxic fumes all the time, it’ll probably be worth a lot less than your neighbour’s equivalently sized EV.
A FIAT 500e in blue parked on a street in London

Petrol & diesel cars and depreciation

It’s been said for a long time that diesel cars hold their value better than their petrol counterparts. That’s because diesel engines generally last longer, are more fuel efficient and are said to be more reliable. But could this trend be set to change in the coming months and years?

There’s plenty of reasons to suggest so, with the UK Government banning the sales of new petrol and diesel cars from 2030 onwards. Plus, the recent outpouring of various emissions scandals surrounding some diesel engines have certainly harmed manufacturer’s reputations when it comes to claims on how ‘clean’ their diesel cars are. And with the world slowly becoming more eco-conscious, how much toxicity we’re pumping into the atmosphere can be a big deciding factor on whether we choose that type of engine or not.

On average, petrol & diesel cars depreciate by up to 60% of their original value, after three years and 36,000 miles of driving.

Don’t forget, if you’re an older petrol or diesel car driver in built up cities like London, you may be hit with ULEZ (Ultra Low Emission Zone) charges if your car doesn’t meet the required emissions standard for your area. Older diesel cars also produce more harmful exhaust fumes than older petrol ones. It’s good to note,  that if you’re in one of these ULEZ areas, your petrol or diesel car may sell for a lot less than an electric one.

Some people still root for the diesel engine, though. They’re known to be better on fuel than petrol cars on consistent long journeys, as well as generally lasting a little longer too, with them being capable of much higher mileages before they break or become too cost-ineffective to repair. This means that right now, diesel cars don’t depreciate as fast as their petrol equivalents. But they’re catching up as the world moves on and don’t forget, they’re still more expensive to buy than petrol cars in the first place.

A FIAT 500e in blue parked on a street in London

Electric cars and depreciation

The simple fact of that matter is that modern EVs hold their value far better, depreciating a lot less than modern petrol or diesel cars.

On average, electric cars depreciate by up to 50% of their original value, after three years and 36,000 miles of driving.

Some electric cars in particular hold their value far better than similarly sized and priced ICE cars. The Vauxhall Corsa, for example, can be optioned with a petrol or diesel engine, or electric motor in the form of the Corsa-e. The Corsa-e is said to hold its value 2-3% better than the petrol variants.

What are the slowest depreciating electric cars in 2023?

Auto Express magazine have recorded the top ten slowest depreciating cars in the UK, with three EVs making the list: the Volkswagen ID.Buzz, Porsche Taycan and MG4.

After three years and 36,000 zero emission miles, it’s said they’ll hold 70.1%, 69.3% and 66.5% of their original values respectively. That’s pretty good going when compared to their ICE siblings.

Volkswagen ID.Buzz
A Porsche Taycan Turbo S in silver parked up with the lights on
An MG4 EV in orange from the front

Even one of the fastest depreciating EVs in 2023 still won’t lose as much value as some ICE cars of a similar nature.

We Buy Any Car say petrol cars can depreciate by up to 60% (more in some cases!) after just three years of use. Similarly, electric cars only depreciate by around 49%, a noticeable difference for the owner.

Some data from carwow in 2021 suggests if you bought an EV for £30,000, it would be worth £14,670 in 2024. But if you bought a petrol or diesel car for the same value, at the same time, then it would be worth £12,000. That’s a noticeable chunk of money gone in depreciation alone. And the figures stack up today.

It can be said then that EVs hold their value better than their ICE counterparts.

But, like anything, this comes with the caveat that this is an average of all cars, so any given car will likely (and often do) deviate from this to some extent.

When EVs first came out, they depreciated quite quickly as there wasn’t enough of a demand for them. But as the batteries have improved over time, demand has risen. This technology is only continuing to improve as well, which is great news for the new EV buyer, but might mean older EVs will soon start depreciating faster (as buyers opt for the newer batteries). We’re yet to see this have a huge effect just yet though.

It’s also worth pointing out here…

Electric cars are holding their value for longer because of current exemptions from vehicle excise duty, congestion charges and low-emission zones.

How can I slow down the depreciation of my car?

Whether petrol, diesel or electric, taking care of your car by regularly servicing it, keeping the interior clean and not bumping the bodywork will help retain the car’s value.

Buying a premium-brand will also help as these tend to hold their value for longer (take that Porsche Taycan as an example).

But, regardless of any preventative measure you take, an EV or ICE car will almost certainly depreciate. So, is there another way? Can you get yourself into a new electric car without worrying about depreciation?

Subscription: the alternative to buying or leasing

The elmo cube logo lit up on a hanging light box

Electric car subscriptions are the smarter way to lease and run an electric car.

Long story short, with a subscription, you can afford to forget everything you’ve just read. A car subscription is a flexible alternative to leasing, meaning you can choose what EV you want and hand it back after a short minimum term. You don’t need to sell your car at the end of the term, you just hand it back – and you’ll pay a lot less than going down one of the more traditional finance routes. This is the modern way to run a car.

With elmo, our subscriptions are all-inclusive too, with your monthly payment covering everything you need to live with your new electric car, worry free.

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