Electric vehicle resale values crash worldwide in 2025

The secondhand electric vehicle market is experiencing significant depreciation, causing substantial financial losses for fleet operators, exemplified by Hertz reporting a $2.9 billion loss in 2024 largely due to plummeting EV values and the sale of 30,000 units at steep discounts. This trend, where models like the Tesla Model Y lost 42% of their value in two years, is primarily driven by market uncertainty surrounding battery lifespan and replacement costs, though emerging data suggesting slower battery degradation could eventually help stabilize resale prices.

Analysis

The secondhand electric vehicle (EV) market is experiencing severe depreciation globally, significantly impacting asset values. For instance, 2023 Tesla Model Ys have lost 42% of their value in two years, compared to just 20% for comparable Ford F-150 trucks. A UK study further highlights this disparity, showing 3-year-old EVs depreciated over 50%, while gasoline cars lost 39%.

This rapid devaluation has led to substantial financial distress for fleet operators. Hertz reported a $2.9 billion loss in 2024, primarily attributed to plummeting EV values, and subsequently divested 30,000 EVs, with Teslas purchased for over $40,000 reselling below $20,000. India's BluSmart also saw its EV fleet, originally valued at $12,000, flood the market at $3,000.

The primary driver of this depreciation is market uncertainty surrounding EV battery lifespan and replacement costs, as the battery constitutes a significant portion of an EV's value. However, emerging data from Recurrent suggests batteries deteriorate only 1-2% annually, with only 1% of post-2016 EVs requiring replacements. This data could foster increased confidence in used EV batteries, potentially stabilizing resale prices over time.

Key Decisions for Investors

• Investors with exposure to automotive OEMs (TSLA, F) or rental fleets (HTZ) should closely monitor EV residual value trends and battery degradation data, as this directly impacts asset values and future profitability.
• Evaluate the financial health and EV fleet exposure of rental companies and fleet operators, given the significant asset impairment risks highlighted by Hertz's $2.9 billion loss.
• Consider the potential for long-term stabilization in the used EV market as more data on battery longevity emerges, which could eventually support resale values and mitigate future depreciation concerns.