The Rapid Depreciation of Electric Vehicles
In August, multiple new energy vehicle manufacturers launched refreshed or next-generation models with significant improvements in intelligent features, range performance, and body design—all at more affordable prices. For instance, NIO’s new ES8 starting price dropped from 528,000 yuan to 416,800 yuan, a reduction of nearly 90,000 yuan. The 2025 XPeng P7 entry model saw performance upgrades while becoming 3,000 yuan cheaper than its predecessor.
While these “more for less” offerings benefit consumers, they accelerate depreciation for existing owners. The EV depreciation problem has become a critical concern for both industry and market participants.
EV Depreciation Rates vs Traditional Vehicles
Data from the China Automobile Dealers Association shows concerning trends in EV depreciation. From January to July 2025, plug-in hybrid vehicles maintained an average three-year depreciation rate of 40-47%, while pure electric vehicles hovered between 42-45%.
The association specifically noted that July’s slight dip in EV resale values directly correlated with frequent new model releases.
Compare this to traditional internal combustion engine vehicles, which consistently maintain three-year depreciation rates above 50%, with certain segments like MPVs, large sedans, and SUVs often retaining 55% or more of their original value.
Firsthand Insights from the Used Car Market
Zhang Hao, a used car dealer with six years of experience at Beijing Wufang Tianya Auto Service Park, openly admits preferring gasoline vehicles over electric ones. “Internal combustion engine cars are less likely to lose money,” he explains. “New energy vehicles face significant impact from various subsidy policies at the national level. Subsidies can adjust at any time, making prices unstable and creating challenges for used car dealers.”
He reveals that profitability in used EVs requires extremely short turnover cycles: “You must buy and sell quickly. If they sit too long, you will definitely lose money.”
Regarding brand preferences, Zhang favors acquiring vehicles from leading new energy manufacturers like Tesla and Li Auto, while avoiding electric vehicles from traditional automakers. “Traditional manufacturers often create electric vehicles based on gasoline car architectures—what we call ‘oil-to-electric’ conversions. Their market share doesn’t match domestic new energy vehicles, and their range capabilities and intelligent features often fall short. This leads to continuously declining new car prices, making used car valuations difficult.”
Structural Reasons Behind Rapid EV Depreciation
Cui Dongshu, Secretary General of the China Passenger Car Association, has publicly stated that new energy vehicles demonstrate lower depreciation rates than traditional vehicles. “Traditional internal combustion engine vehicles represent mature mechanical products with strong durability, usable for 15-20 years,” he notes. “New energy vehicles more closely resemble durable consumer goods whose core components—batteries, chips, and other electronic modules—update rapidly and become obsolete easily, typically limiting overall lifespan to approximately eight years.”
This fundamental difference means gasoline vehicles maintain clear advantages in used car circulation and price stability due to mature technology, convenience of use, and high market recognition. Meanwhile, new energy vehicles face increasingly prominent challenges in depreciation rates and secondary market circulation.
Market Competition and Price Wars Accelerate Depreciation
The depreciation gap between electric and gasoline vehicles reveals structural problems behind the rapid development of new energy vehicles. Multiple experts note that while automobiles are inherently depreciating assets, EVs lose value noticeably faster due mainly to market supply-demand imbalances and intensified industry competition.
Zhang Guohua, Vice Chairman of the China Urban Transportation Association, explains that past years’ policy encouragement and capital investment created certain competition and resource waste: “New energy vehicles were labeled among the ‘new three items,’ prompting local governments and enterprises to increase investment, resulting in certain internal competition and resource waste that accelerated used new energy vehicle depreciation.”
To alleviate excessively rapid depreciation, the industry must first address competition and price war issues. Simultaneously, insufficient financial system support for the used car market—including imperfect loan, installment, and replacement policies—indirectly affects users’ long-term ownership willingness.
The ‘Fast Consumer Goods’ Phenomenon
He Jianhua, researcher at the Shanghai Academy of Social Sciences and Dean of the Yangtze River Delta Modernization Research Institute at Nantong University, points out that rapid iteration and intelligent characteristics make new energy vehicles exhibit “fast consumer goods” features among young consumer groups, potentially replaced within three to five years—inherently limiting their depreciation performance.
He identifies multiple factors accelerating vehicle depreciation: First, opaque new car pricing combined with rapidly iterating intelligent technology causes vehicles to depreciate quickly in the short term. Second, limited battery life and high replacement costs directly impact used car values. Third, incomplete after-sales service systems along with unestablished brand appeal and user loyalty create consumer uncertainty about long-term ownership. These overlapping factors make used car evaluation and market pricing difficult to stabilize.
Improving Industry Profitability and Battery Technology
According to DearAuto statistics, 13 of China’s 18 listed passenger vehicle enterprises achieved profitability in 2024, with combined net profits totaling 122.677 billion yuan. Including the five loss-making companies would reduce total profits by 33.2 billion yuan, bringing Chinese listed passenger vehicle enterprises’ overall net profit below 90 billion yuan—less than 40% of Toyota’s annual profit (233.7 billion yuan).
Zhang Guohua notes that while China possesses globally leading manufacturing capacity, leading automakers’ brand influence and profitability remain relatively low. In this landscape, enterprises mostly rely on price competition, thereby compressing used car values.
He believes maintaining healthy depreciation levels for new energy vehicles requires focusing on three aspects: improving product quality, building influential brands and services, and perfecting financial support systems—particularly supply chain and residual value financing. Only by addressing these deep-seated problems can depreciation rates gradually stabilize for healthy development.
The Battery Technology Imperative
He Jianhua considers battery technology breakthrough central to improving new energy vehicle depreciation rates, potentially achievable through improved battery recycling and battery-swap after-sales service systems. Currently, most automakers still primarily focus on enhancing battery energy density and range, but this doesn’t change electric vehicle batteries’ inherent aging problems and range attenuation characteristics. Breaking through this technical bottleneck would significantly improve new energy vehicle depreciation rates.
Additionally, while the first batch of new energy vehicles reaches critical battery replacement and recycling points, high battery replacement costs largely suppress secondary market vitality. He suggests that if automakers can establish standardized, affordable battery replacement and recycling systems combined with transparent pricing and complete after-sales service, they will effectively enhance consumer confidence in long-term ownership, gradually stabilize the used car market, and lay foundations for new energy vehicle circulation development.
Key Takeaways for Consumers and Industry
The EV depreciation challenge represents a complex intersection of technology, market dynamics, and consumer behavior. While electric vehicles offer numerous advantages in operation costs and environmental impact, their rapid depreciation remains a significant concern for owners and potential buyers.
For consumers, understanding these depreciation patterns is crucial when making purchase decisions. Leasing or subscription models might provide alternatives to ownership for those concerned about resale value. For the industry, addressing battery technology limitations, creating stable pricing structures, and developing robust secondary markets will be essential for sustainable growth.
As technology continues to evolve and market structures mature, the depreciation gap between electric and gasoline vehicles will likely narrow. However, this will require coordinated efforts across manufacturers, policymakers, and financial institutions to create systems that support long-term value retention for electric vehicles.
Stay informed about the latest developments in EV technology and market trends to make smarter decisions about electric vehicle ownership and investment.