First in, best redressed?
Early adopters are a generous lot. They bought the big, flat-screen TVs at a cost numbered in five figures – so that within a decade the not-so-early adopters could afford to acquire a nice TV at a four-digit price.
It's the same with mobile phones, desktop computers and probably every new-fangled gadget all the way back to that miracle of ingenuity from the late 19th Century, the stump-jump plough.
So why should electric vehicles (EVs) be any different?
"EVs are really seen as a technology purchase at the moment; people want to buy the latest and greatest, due to improving technology – in particular around battery life and range," says Ross Booth, Data Services Director at RedBook.
While EVs are expensive now, the price will inevitably come down as economies of scale make them relatively cheaper to develop and build, and a combination of increased supply and positive word of mouth will heighten mainstream consumer demand.
In the meantime, at least some of the added expense buying an EV rather than a car with an internal-combustion engine can be recouped in lower running costs.
A question often overlooked however, is whether there'll be any pay-off at the other end... five or seven years down the track, when it's time to sell. Ross Booth thinks not. Certainly not while the technology continues to evolve and new-car prices for EVs remain high.
"Like an iPhone, [the promise of new technology] influences demand for new EVs, rather than a used EV purchase. Who wants to buy an iPhone7?"
Tesla's success story
At present, the news looks bad for early adopters of EVs – unless they've bought a Tesla.
"There are still concerns in Australia [regarding] the substantial premium in the original purchase price, range anxiety, decreasing range over time and the cost and timing of a replacement battery," Booth observes.
"As a result used EV prices decrease substantially quicker compared with the equivalent petrol, diesel or even hybrid competitors. The exception is Tesla, which is seen as a technological sports car, with a different brand perception, rather than a true EV."
The expensive, high-performance electric sedans and SUVs from the USA do hold their prices very well. At a minimum asking price of $75,000 for a five-year old example, the Model S 85 has retained around 65 per cent of its new purchase price.
A Mercedes-Benz E 300 BlueTEC Hybrid from the same year has retained 46 per cent of its new-car purchase price, according to figures supplied by RedBook.
And conventional E-Class models from the same year depreciate just as fast, if not faster. The E 250 CDI (diesel) from 2014 cost $99,400 when new and is now valued by RedBook at $37,700 for private sale. The E 250 (turbo-petrol) cost $96,900 new in 2014 and is now valued at $33,700 used, selling privately.
Those numbers equate to retained values of 43 per cent for both petrol and diesel models. That's some way in arrears of the hybrid model's 46 per cent resale value – and a long way back from 65 per cent for the Tesla.
The Tesla has lost $38,907 from new, but the E-Class has lost $58,950 for the hybrid, $56,250 for the diesel and $55,410 for the petrol model.
As another example of the 'early adopter' factor influencing the depreciation of an upmarket model, the BMW i3 60Ah from 2015 – $63,900 new – has held its value much better than two conventional stablemates from the same year.
While the retained value for the i3 equates to $37,850, the more expensive 320d M Sport auto sedan ($67,954) from the same year is now valued at $30,100. It's also true of the petrol-engined 320i variant, another M Sport sedan with automatic transmission. The petrol car was priced at $65,654 when new, but is now valued at $29,800 used.
The cost of buying affordable EVs
Unfortunately, it's not the same happily-ever-after ending for buyers of lower-priced EVs. The Mitsubishi i-MiEV was originally leased to customers throughout Australia – including carsales – because the purchase price for such a small car would have been prohibitive at the time.
The 2011 i-MiEV did eventually go on sale, priced at $48,800. Buyers can pick up a used example for $14,200, according to RedBook.
That's a lot of money lost by the first owner... about $34,600. The retained value for the i-MiEV is just 29 per cent of its new purchase price. That's not good, but nor is it that far away from the retained value of the Mitsubishi Colt from the same year – roughly 35 per cent.
Still, it's misleading to bandy around percentages rather than actual dollar cost. As Booth notes, "you can't bank percentages".
"At the end of the day it comes down to Total Cost of Ownership, and EVs may have lower running costs, but the major cost in owning any vehicle is the depreciation."
Booth suggests that the depreciation of lower-priced EVs, expressed in dollars, will begin to stabilise as technology advances trickle through to the used-car market and consumer sentiment adjusts to these alternative-energy vehicles.
"Used values of EVs will improve in the future when the demand for used EVs improves," Booth observes.
"A good comparison is hybrid vehicles in Australia. These have been on sale for more than 20 years and used pricing of Hybrids still lags behind petrol for similar reasons to EVs, including customers buying the latest and greatest and the advantage of a used hybrid compared with a traditional petrol vehicle."
A battery of objections
Battery longevity will be crucial to community acceptance of the EV, but concern for the lifespan of the nickel-metal hydride battery of the Toyota Prius hybrid is no longer the issue it once was.
People probably stopped worrying about Prius battery life after the taxi industry began using the small hybrids (and Camry Hybrids too) by the thousands.
That changing attitude is reflected in the retained values of the Prius gradually gaining ground – to the point where the resale value for the Prius these days is on a roughly equal footing with conventional cars.
"The gap in used values of hybrids is nearing parity with traditional petrol cars due to improved technology, the acceptance of that technology and the closing of the new vehicle price premium," Booth notes.
"Many hybrid vehicles are now only a couple of thousand dollars more than equivalent petrol models, whilst in the past they were sold at a major premium not too dissimilar to current EVs."
EVs appear to be on the same trajectory as hybrids. The tipping point will be when mainstream buyers looking for an affordable, practical car begin to outnumber the early adopters.
Currently EVs are too expensive, and the first buyer usually takes a big hit when it comes time to sell, but Tesla has shown that doesn't have to be the case, and upcoming models like the Porsche Taycan and Mercedes-Benz EQC will likely bolster the argument in favour of electric cars. But as to when EVs will be perceived to match conventional cars for total cost of ownership, nobody can say.
"When will EVs achieve depreciation parity with petrol and diesel engines in Australia?" Booth asks.
"Will it take over 20 years like hybrids? Many factors impact the demand and supply of vehicles, including government policy, which we see greatly influences new and used EV sales globally.
"The fact is more EVs are entering the market at an ever improving performance. The impact on used EV depreciation will continue to be influenced by the supply of the vehicles and growing demand for a used EV compared with a new EV or a new or used petrol equivalent."
Of course one way to avoid the pain of a low resale value is this: don't sell the car.