Depreciation is the single largest cost of car ownership for most drivers - yet it is the one most people ignore. For electric vehicles, the numbers are particularly stark: the average BEV loses around 73% of its value over five years, compared to 60% for a petrol car and just 57% for a hybrid. But averages mask enormous variation. Some EVs hold their value remarkably well; others become nearly worthless. Here is everything you need to know.
Year-by-Year Depreciation: BEV vs ICE vs Hybrid
The table below shows the percentage of original value retained after each year, based on Cap HPI and Glass's Guide residual value data, adjusted for UK market conditions in 2026.
| Year | BEV (Electric) | ICE (Petrol/Diesel) | HEV (Hybrid) |
|---|---|---|---|
| 0 (new) | 100% | 100% | 100% |
| 1 | 71% | 78% | 81% |
| 2 | 54% | 65% | 68% |
| 3 | 41% | 55% | 57% |
| 4 | 33% | 46% | 49% |
| 5 | 27% | 40% | 43% |
| 7 | 17% | 29% | 33% |
| 10 | 7% | 19% | 21% |
Source: Cap HPI, Glass's Guide, Cazoo and Auto Trader UK residual data, Autovista Group. Market segment: mainstream family cars (C/D segment), 10,000 miles/year, average condition. UK market, March 2026.
What This Means in Pounds
For a car purchased new at £40,000, five-year depreciation in absolute terms looks like this:
| Drivetrain | Value after 5 yrs | Total loss | Monthly loss |
|---|---|---|---|
| BEV (Electric) | £10,800 | £29,200 (73%) | £487/mo |
| ICE (Petrol) | £16,000 | £24,000 (60%) | £400/mo |
| HEV (Hybrid) | £17,200 | £22,800 (57%) | £380/mo |
Why Do EVs Depreciate Faster?
- Rapid technological progress - each new generation brings greater range, faster charging, and lower prices. A 2022 model can feel outdated by 2025.
- Battery anxiety - used car buyers worry about battery degradation, even though most batteries retain 85%+ of capacity after 8 years. Fear suppresses demand for used EVs.
- Government incentive distortion - grants and incentives for new EVs artificially inflate the new car market relative to used, compressing used values.
- Charging infrastructure uncertainty - some buyers remain hesitant about public charging reliability, reducing the pool of potential purchasers for used EVs.
- Brand proliferation - the rapid entry of new brands (BYD, Nio, Xpeng) creates buyer uncertainty about long-term parts and software support.
EVs That Hold Their Value Best
Not all electric cars depreciate equally. These models consistently outperform the BEV average on residual values:
- Tesla Model Y - the UK's best-selling car overall in 2023. Strong brand recognition, Supercharger network, and over-the-air updates. Retains approximately 45–50% after 3 years (vs. 41% BEV average).
- Tesla Model 3 - similar story. Refreshed "Highland" version from late 2023 commands strong residuals.
- Hyundai Ioniq 5 - 800V architecture, rapid charging, distinctive design. Cap HPI consistently rates it above average for EV residuals.
- Kia EV6 - shares platform with Ioniq 5. 7-year warranty reassures used buyers.
- BMW iX3 - premium badge, proven reliability heritage. Retains value better than non-premium EVs in the same price bracket.
EVs With the Worst Residual Values
These models have historically suffered steeper-than-average depreciation, though market conditions continue to evolve:
- Jaguar I-PACE - early EV premium pricing, limited range updates, expensive servicing. Some examples have lost 80%+ over 5 years.
- Early Nissan Leaf (24 kWh) - CHAdeMO charging (now rare), limited range, early battery chemistry degradation. Now worth very little.
- Renault Zoe (pre-2020) - battery lease models especially complex to resell; outright purchase versions fare better.
- Polestar 2 (early build) - premium pricing that the brand could not sustain; aggressive discounting of new cars crushed used values.
- MG4 - low entry price means low absolute value but percentage loss is high (~78% in 5 years).
Depreciation vs Running Costs: The TCO Trade-Off
Here lies the central paradox of EV ownership: EVs cost less to run but more to depreciate. For many drivers - especially lower-mileage ones - the fuel savings are simply not large enough to offset the faster depreciation. Hybrids, by contrast, offer a middle path: lower depreciation than EVs, with meaningfully better fuel economy than pure ICE.
The maths tends to favour EVs for drivers covering more than 12,000 miles per year with good access to cheap home charging. Below that threshold, a hybrid or even a well-chosen petrol car may have a lower total 5-year cost.
Strategies to Minimise Depreciation Risk
- Buy a 2–3 year old used EV - the steepest depreciation has already happened. A 2023 Tesla Model Y at £28,000 is dramatically better value than the same car new at £44,000.
- Choose models with strong residuals - stick to Tesla, Hyundai, Kia, and BMW. Avoid discontinued or orphaned models.
- Use leasing or salary sacrifice - depreciation becomes the leasing company's problem, not yours.
- Keep mileage low - high mileage accelerates both depreciation and battery degradation concerns.
See how depreciation affects the total cost of any specific EV model with our TCO calculator - enter your car, mileage, and ownership period to get a year-by-year depreciation curve.
Sources: Cap HPI UK Residual Values Q1 2026, Glass's Guide, Auto Trader UK Market Report 2026, Cazoo Market Data, Autovista Group EV Residual Report. Depreciation curves based on mainstream C/D segment at 10,000 miles/year in average condition, UK market. Individual models vary significantly. Last updated: March 2026.