Empirical analysis of the depreciation of electric vehicles compared to gasoline vehicles

Abstract

The depreciation pattern of passenger vehicles is an important input parameter for economic considerations of buyers and other stakeholders such as financial insti-tutions. Due to their technical specifications and uncertainties in their degradation and life expectancy, it seems plausible that electric vehicles depreciate differently to conventional vehicles. This paper contributes to existing research in the economics of electric vehicles by analyzing the depreciation of electric vehicles along several countries and segments and compares it to gasoline vehicles by empirical analysis of public available data of 24,000 used vehicle sales. The results show that vehicles have a degressive depreciation relationship over the age of the vehicle, but that elec-tric vehicles have a substantially higher depreciation of 1.16% per month (13.9% per annum) compared to gasoline vehicles with 0.87% per month (10.4% per annum). Consequently, research into the economics of vehicles and budgeting considerations should apply a different depreciation rate for electric vehicles than for conventional vehicles. The resulting difference in depreciation to gasoline vehicles imply adapta-tion in economic models of insurance and leasing companies and gives governments the opportunity to adapt subsidies for electric vehicles to become more efficient.