EVs Get Hammered on Residual Values, For Now11/20/2020
The boys and girls over at the Mach-E Club forum snagged some alleged documents from Ford to dealers saying dealers should expect about a 40 percent residual value on the new EV after three years and near 30 percent by year four. That puts a $60K Mach-E at about $18,000. An average car loses about 25 percent in the first year, and 15-18 percent from years 2 to 6, according to Black Book. Overall, residual values average about 52 percent over 36 months. But the Mach-E isn’t alone in this depreciation, as many EV owners are learning the same thing.
There are several reasons for the phenomenon. First is the $7,500 tax credit. The first buyer takes it, the second buyer does not. Continued weak demand for EVs also comes into play. Demand is rising but at a glacial pace. In 2019 EV only enjoyed 2.5 percent market share. The less likely a vehicle is to sell again, the less the residual value.
It does seem like range makes a difference, and here the Mach-E does well. The lowest range trim gets you more than 200 miles on a charge. More efficient ones get near 300.
The Kia Soul EV, with a 111-mile range has a residual of just 29 percent of its original value over three year, according to Kelley Blue Book. The Nissan Leaf (150 miles) is at 34.3 percent; the Hyundai Ioniq Electric (124 miles) is 35.5 percent; the Chevy Bolt, with its solid 238-mile range, comes in near the Mach-E’s expected rate at 41 percent.
The next few get better. The Audi E-Tron (248 miles) holds 52.5 percent of its value; the Tesla Model X (295 miles) is at 52.7 percent; the Jaguar i-Pace is one tick higher at 52.8 percent and the leader is Model 3, which holds 64.3 percent of its original value. It seems like Ford is overestimating how much value these longer-range Mach-Es will hold. Again, we remind you these are calculated from sticker price, not from price after tax credit.
The electric Fiat 500e and BMW i3 are closer to the Soul than the Teslas. But all these values are going up, if slowly, and range is key.
Ford noted that “standard lease residual values for Mach-E are comparable to other EVs.” True. The brand also said it is “offering customers several options to finance the all-new Ford Mustang Mach-E in a way that best meets their needs. These include a traditional Ford Red Carpet Lease or our Ford Options product that puts the customer in control of the Federal Tax Credit and allows them at contract end to buy the vehicle, return it or renew into their next Ford product.”
Just like everything with electric cars–range, charge speed, market share–we expect residual values to go up in time as these vehicles are more widely adopted and accepted. Check out the Mach-E Club for a few more lines of residual values in the Mach-E’s various trims.
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