The last time I bought a new car was in 1999. You could also say it was last century, to make it a bit more dramatic. I remember it clearly, firstly because the car in question was a beautiful, dark blue Saab 9-3 Convertible with a beige leather interior, but also since it was only shortly thereafter that my wife became pregnant with our daughter. Judging by comments from friends and family, the normal course of action would have been to say “too bad”, sell the convertible and buy a family station wagon. I didn’t.
Instead, together with my better half, who to her credit fully supported me in this, we set about finding a baby pram that when folded, would be small enough to go into the Saab’s boot, at least with the rooftop up. I seem to remember that the one we ended up with was rather expensive, but if you folded it properly and removed the wheels (of the pram that is, not the car), you could just about squeeze it into the boot.
The point here is not to further investigate the baby pram market. However, when we eventually bought a more traditional family car, it was the first of many to follow on the used car market. My reason for this is the same as for most people: I’ve mostly bought my cars privately and have wanted to avoid the massive depreciation all but a very small number of exotic cars see in the first two to three years. The smell of a new car is certainly great, but to me, it hasn’t been worth 30% or more of the car’s price.
When talking about depreciating car values, in the last years the discussion has mostly been about EV’s and the astronomic depreciation they saw in the first 2-3 years, i.e. from 2019-2020 and onwards. This was certainly an effect of the highly inflated prices many of them were sold at as new. On one hand they were more expensive to produce, but carmakers also knew that many of them would be leased by companies, making price is less of a factor given all the incentives companies in most countries were handed out by the state, i.e. you and I.
Three years later, corresponding to the typical European lease period, many of them hit the used market at the same time as the popularity of EV’s started to crumble. Today, you can easily pick up an early 2020 Taycan for 30% of its price as new. The question is rather if you’re brave enough to do so, given quite a long list of issues those early cars had, and what even in EV terms was quite a poor range.
However, although it’s been less discussed, the depreciation of traditional internal combustion cars (ICE’s) hasn’t made anyone happy either. When I sold my Saab convertible in the early 00’s after about two years, I remember losing roughly 30%. That’s far less than what the typical ICE loses today over a similar time period. And given that, now that we’re a few years further down the line, does it still hold true that EV’s depreciate more in the first years than ICE’s? In a very unscientific way, that’s what I’ve spent part of this week looking at.
For this exercise, I’ve taken an EV and an ICE in the same category and from the same brand, produced in 2022-2023, and with less than 50′ km’s on the clock. EV’s have a lot of horsepower, so I made it a condition for the ICE’s to have around 500 hp as well, but steered clear of the M-cars and AMG versions. For the EV’s, I made a theoretical range of at least 400 km a condition, knowing that will in reality be far less. Equipment-wise, I tried to get comparable cars with similar equipment levels.
I looked at this across four categories: SUV’s, four-door sedans, sports coupés and shooting brakes. That also means that I made it a condition that the same brand had both an ICE and an EV in the same category in 2022-2023. I picked the BMW X5 and iX for the SUV category, the MB EQS (sedan) and S580 for the sedans, the Audi e-tron GT and TT RS for the sports coupes, and finally the Porsche Taycan and Panamera for the shooting brakes. And before you tell me shooting brakes isn’t really a category, the reason for including them is that both of them look bloody good! Interestingly, both also sell far better as shooting brakes than as sedans.
Before going into the results, this whole exercise is obviously not more than an indication. The cars aren’t perfectly comparable, as notably the exact equipment may vary. You could obviously compare models from different brands, but that makes it more complicated as brands depreciate differently. And you can certainly argue that an e-tron is not very comparable to a TT, given it’s a proper four-seater. That’s however the best I could think of given the condition of having an ICE and an EV from the same brand. The prices are my estimates of what you would have to pay after a bit of negotiation, and they are from the Swiss market. However, that’s usually a good approximation at least for the rest of Europe.
What the above results show is that all EV’s in the sample from 2022-2023 have indeed lost more value than their ICE counterpart, but that the difference isn’t huge, and smaller than a couple of years earlier. That’s however not because EV’s have become more stable in value, it’s rather the ICE’s that depreciate faster than they used to. What also seems to be true though, is that it’s not only ICE’s that eventually find a floor – as said, you can pick up a 2020 Taycan at 30% of the price as new, but those values seems to have stabilized now, five years later.
The Audi e-tron and BMW iX have certainly not been good to your wallet if you’ve bought them privately, but in both cases, part of the reason is an inflated price as new. That said, the regular BMW X5 is also not a car you would have wanted to buy as new. The Taycan has retained about half its value making it the best EV over the period, and the Panamera is the only car that has held its value significantly better than the others.
Where does this take us? Well, as little as I wanted to back in the early 00’s, I still wouldn’t buy a new car today, if it’s my money we’re talking about. That’s especially true if it’s an EV, but that said, even EV’s eventually see an end to their depreciation. So if it’s an EV you’re after, I would buy a Taycan or an e-tron, but rather one from 2022-2023 than the first two years. However, if like most, you drive a lot of short distances but don’t want to buy a second car for your longer trips, then I would argue that the best choice is none of the above, but rather a modern hybrid.
Taking the Panamera hybrid from 2022-2023 as example, it has a depreciation that is no different to the ICE version and offers you around 50km of electric range, whilst also lowering your fuel consumption overall. Some other hybrids will have even better electric ranges. The downside is extra weight over a regular ICE, but automakers have become very good at hiding that, especially the one from Zuffenhausen. Finally, if you only drive long distances, then nothing has changed and a 2-3 year old ICE remains the best choice!
The Thrill of Driving 