Recent market analysis has revealed a significant shift in the automotive industry: used electric vehicles (EV’s) have become more affordable than their petrol and diesel counterparts. This trend, highlighted by data from Cap Hpi, shows that the average retail prices of three-year-old EV’s are now 8.5% lower than those of equivalent petrol cars, with the price gap widening to nearly double by the four-year mark.
This development offers compelling reasons for consumers to consider going green, especially given the lower operating costs associated with EV’s compared to internal combustion engine (ICE) vehicles of the same age. The report comes at a time when sales of used EV’s have surged, with over 50% more transactions recorded between April and June 2024 than the same period of the previous year.
While new electric cars typically come with a higher price tag—often between £5,000 and £10,000 more than their petrol or diesel equivalents—the rapid depreciation of EV’s has made them increasingly attractive in the used car market. Over the past two years, the value of used EV’s has dropped sharply, making them more accessible to a broader range of buyers.
Cap Hpi’s data indicates that at three years old, EV’s are, on average, 8.5% less expensive than comparable petrol or diesel vehicles. By the fourth year, this price difference grows to around 14%. For popular models like the Jaguar I-Pace, Mercedes EQC, and Tesla Model X, this depreciation can translate to savings of over £20,000 compared to their prices in July 2022. In the case of a Porsche Taycan, the savings could be as much as £40,000.
This dramatic reduction in prices means that cars once considered unattainable are now within reach for many consumers. The increasing availability of second-hand EV’s is also driving demand, as more motorists look to reduce their environmental impact and take advantage of the cost savings that EV’s offer, particularly given the high prices of petrol and diesel.
The used EV market is experiencing a notable boom. According to the latest figures from the Society of Manufacturers and Motor Traders (SMMT), 46,773 used all-electric vehicles were sold last year in the second quarter, representing a 52.6% increase compared to the same period last year. Although EV’s currently make up just 2.4% of the used car market, this is the highest share recorded to date, up from 1.7% the previous year.
The rise in used EV sales is partly attributed to the increasing affordability and wider choice available, thanks to a resurgence in new car demand. Market insights from Auto Trader suggest that price consistency between electric vehicles and traditional vehicles is typically achieved around the three-year mark. Although new EVs generally cost about 33% more than new ICE vehicles, the demand for three-year-old EV’s has risen sharply, with these cars selling faster than the rest of the market in June.
Searches for EV’s in the three-to-five-year-old category saw a 175% year-on-year increase in June, while overall searches for EV’s of all ages grew by 70%. In contrast, searches for used petrol cars declined by 9%, and diesel by 10.5%.
To illustrate this trend, a comparison between a three-year-old Tesla Model 3 and a BMW 3 Series found that the EV was nearly £2,000 cheaper, with the Tesla priced at £22,400 and the BMW at £24,300. Similarly, a three-year-old Jaguar I-Pace EV was £10,000 less expensive than its petrol counterpart, the F-Pace, costing £23,400 compared to £33,500.
As the used EV market continues to expand, consumers are increasingly drawn to the environmental and financial benefits of electric vehicles, making them a more compelling choice than ever before.
