If something looses value faster than something else it can be compared to, then it's considered as worse, meaning fewer people are going to buy it, meaning if you have one, you'll be able to afford less than others in a few years.
Depreciation is huge factor if you buy something for utility.
I think we can say that EV and ICE has nearly same utility, perks on either side. Faster refuelling vs. being able to do it at home.
Now next we can compare operational costs, what is the cost of fuel/electricity and maintenance. With home charging yes EVs are ahead.
But if we take into account Purchase price minus price you get when selling. Well EVs are often more expensive to start with. And then they depreciate more so you get less as an percentage from original purchase price.
Now it can very well be that you come lot of ahead in scenarios where you replace car with new one every 3 or 5 years with ICEs.
So total cost of ownership does matter. And big chunk of that is depreciation. Unless you are one of the few who buy new and then drive it to junk yard.
Unless a 5 year old EV has lost a lot more functionality than a 5 year old ICE, that situation doesn't seem likely.
If in 5 years, your EV (that had similar utility as an ICE when you bought it) has lost so much value relative to a new EV, then the new EV must offer much more utility over both the old EV and the old ICE, in which case your ICE should have lost a similar amount of value.
My point is either the assumption that their functionality doesn't decrease rapidly is incorrect or that they won't continue to depreciate at a much faster rate than ICE in the future. It just doesn't make economic sense.
While I don't dispute EV depreciation (it's a fact, no matter the explanation), then I don't think depreciation is as "huge" of a factor as you make it out to be. People buy new cars all the time, while the added utility over a used car is negligible.
I.e, I've only bought cars that are 10+ years (exactly due to the depreciation factor!), but most other people buy or lease as new of a car as they possibly can afford. Doesn't make financial sense to me, yet it's done so very often.
Why would we compare a car purchase to a gold bar purchase when they are completely different things? The article is comparing two products that substitute for each other, so it's notable that the market treats them differently. Someone looking to buy a car is either going to get an ICE or EV; not an EV or a gold bar.
As I said: "than something else it can be compared to"; if we are talking about cars, you compare to other cars, not to gold or even bikes. If this car looses more value than another, then it's shit.
If they're losing value primarily because better options are becoming available rather than their own functionality decreasing, that's not necessarily a bad thing.
It is because people are incentivized to just wait for the "better options" that everyone knows are coming soon. Or, let's say you bought one and had an accident that totals the car but oops, the steep depreciation curve means you have to go out of pocket to pay off a total loss. No one wants that.
> you bought one and had an accident that totals the car but oops, the steep depreciation curve means you have to go out of pocket to pay off a total loss
That can happen with a conventional car as well, which is why gap insurance exists. The regular insurance should still give you the replacement price (which would be the depreciated value).
Always waiting for "better options" is often irrational. You should buy what's best for you today.
If the value of your EV has dropped to $10k and you get paid out that much for an accident, then in theory you should be able to buy a similar condition EV on the used car market for $10k. What's the problem with that?
> Always waiting for "better options" is often irrational. You should buy what's best for you today.
If you're trying to get people to switch en masse to EVs, it's not good for everyone to be in perpetual "ehh there's gonna be way better ones around the corner" mode.
> If the value of your EV has dropped to $10k and you get paid out that much for an accident, then in theory you should be able to buy a similar condition EV on the used car market for $10k. What's the problem with that?
The problem is when your loan balance is $20K and you're only getting a $10K payoff...
Hey, did you read the article? The newsworthy point is that the EVs depreciate faster than gas counterparts.
But hey, that just means better used EV prices for the rest of us. You can get some high end gently used ones for a great price.
—
“ For Tesla owners in the U.S., their 2023 Model Ys are worth 42% less than what they paid two years ago, while a Ford F-150 truck bought the same year depreciated just 20%. Older EV models depreciate even faster than newer ones. ”
I'm not sure I'd call an F-150 a "counterpart" to a Tesla Model Y, especially when the F-150 Lightning exists. I assume that it is because F-150 vs F-150 Lightning disproves the premise of this article.