Comment by wlesieutre
1 day ago
It’s not really fair to compare depreciation against MSRP when they were being sold new at massive discounts. You could’ve gotten one of these for $40,000 off.
https://www.carscoops.com/2024/02/toyota-offers-crazy-40k-di...
This is a source of a lot of similar press around EV depreciation. They compare the MSRP of an EV 3 years ago with the current used market price, ignoring that the actual price paid is often significantly less due a combination of discounts, tax credits, and rebates.
EV depreciation is a very different beast. Basically, EVs are still being sold at a higher price point than their actual cost justifies in some markets. Part of that is manufacturers being a bit behind on their cost cutting and part of that is just because the market is incentivizing selling vehicles at inflated prices.
If you strip that away, you get to more reasonable price points already getting common all over Asia, Australia, and even the EU market right now. There you might find reasonably priced new vehicles at around 25K euros or even below 20K. A few years ago, those vehicles didn't exist and ASPs were closer to 40-50K for a cheap one. So, the second hand value of those older vehicles has indeed depreciated enormously. Because they simply are not worth as much relative to the much cheaper newer generation of cars. These vehicles got obsoleted by a better and cheaper generation of cars.
With hydrogen cars, companies sell them at a loss. They always have. That's why Toyota, the biggest proponent, sells more EVs than they ever built hydrogen cars. Pretty much every quarter now.
The better/cheaper generation of hydrogen cars never materialized. And it probably never will. The hydrogen distribution network never happened either. Because as it turns out, making hydrogen is really expensive. So aside from a few heavily subsidized filling stations, the economics for those is so terrible that they tend to shut down as soon as the subsidies run out. So, that's why they are relatively worthless as a second hand car. You are better off buying a second hand EV. And since those have depreciated a lot, hydrogen cars simply aren't worth more second hand.
And since there is no realistic prospect of ever producing hydrogen cars or hydrogen at price points that can match those of EVs and electricity, hydrogen based transport is at this point dead as a door nail.
The part that's interesting to me is how much the depreciation is posed as negative rather than positive.
The long term value of a car is only really relevant if one is constantly cycling through cars and needs the trade-in/resale value. If a car isn't viewed as an investment and/or the intention is to drive it into the ground, depreciation is purely positive because it means that there's insanely good deals on some great cars right now. Of course everybody's needs are different, but for a lot of people there's nothing that comes remotely close of the value of a gently driven, practically new 1-3 year old lease return EV.
> The long term value of a car is only really relevant if one is constantly cycling through cars and needs the trade-in/resale value.
Depreciation is based on real-world qualities of a vehicle that determine how desireable it is to own over time. Toyotas tend to depreciate slower than Mercedes-Benz, for example, because maintenance and repair costs tend to be lower. For someone looking to buy a car new and drive it for 10+ years, they are probably going to be drawn to car models that have a reputation for reliability and thus hold their value. Even if you don't care about the resale value of a car, you probably do care about the underlying factors driving that resale price.
With EVs the factors driving depreciation are concerns about rapid tech obsolescence, battery degredation and replacement costs, incentives and new price cuts, and charging infrastructure. You also hear stories about Tesla drivers waiting 6+ months for a replacement part, Rivians being totaled because of a dent in a rear quarter panel, etc. These are all reasonable things for a buyer to be concerned with, in my opinion.
But I agree that if you are ok with all of the above in a used EV (range and charging speed may not matter if you have a place to charge at home, for example), there are good deals to be found.
2 replies →
My state assesses annual car taxes based on MSRP rather than real market value, unfortunately, so these fake MSRPs matter to me. :-(
It's extremely fair to compare depreciation against MSRP. What's not fair is to say that they were being "sold new at massive discounts" when in reality it's an asterisk-ridden rebate process that applied to one model year under specific circumstances. That article was spam when it was written, can you provide a first party source for these massive discounts?
Depreciation is measured against the price someone actually paid.
The MSRP doesn’t matter. The S stands for suggested.