A San Jose car salesman posted a video claiming that purchasing a new electric vehicle such as the Tesla Model 3 Performance is financially unwise. Commenters were skeptical of his claim.
On Oct. 6, a Southern California car dealership (@alfa.romeo.of.san.jose) posted a TikTok claiming that electric vehicles depreciate at a much higher rate than the average car, encouraging consumers to purchase used electric vehicles instead. “Don’t buy a new electric car,” the salesman said.
“For 55 grand, Tesla Model 3 Performance has a killer 0 to 60 time,” he said. “I don’t think there’s any other car in the market that can actually achieve that. But would you still buy the car if you knew that it’s gonna be worth 40% less within the first year?”
He clarified that this phenomenon applies not just to Teslas but to other electric vehicles as well. “That’s not the only example,” he added. “I mean, we have Lucid Air Grand Touring. That’s a $100,000 car brand new, and within two years it’s worth about half.”
The salesman says that the cost-saving benefits of buying a new electric vehicle sound enticing, but he claims that these benefits don’t match up to the depreciation a customer will encounter.
“The crazy thing is, a lot of times people would think, … ‘If I buy a brand new car, I get a $7,500 rebate here, I get free charging for a few months, I get little trinkets here and there,’” he said. “But I think all of those free things that you get from the manufacturer are peanuts compared to the depreciation that you get within the first few years.”
The salesman then pivots to sharing his pitch for purchasing a used electric vehicle. “You know, I gotta admit, for about $30,000, to have a car that can go 0 to 60 in under three seconds is a pretty good bargain,” he said.
However, many of the comments are skeptical, implying that his claims were merely a pitch to sell used vehicles. “Dude cars aren’t investments….,” wrote the top commenter.
“All automobiles are depreciating assets,” said another commenter.
Do EVs Depreciate Faster?
Many commenters were also skeptical of his claim that electric vehicles depreciate at higher rates than other vehicles. “So it depreciates 30-40% like any other car.”
There is no clear consensus on the average depreciation rate for new cars, as estimates can widely vary depending on the type of vehicle and the state of the market. However, there are many estimates.
Experian claims that “new cars lose an average of 16% in value during the first year and another 12% during the second year,” additionally claiming that “new vehicles have just 45% of their original value” by the end of the fifth year.
Additionally, it does seem that many experts believe that electric vehicles tend to face a higher depreciation rate, though this is more of a generalization than a proven statistic. An iSeeCars report cited by Bankrate found that “trucks have an average five-year depreciation rate of around 40 percent, while EVs depreciate by nearly 60 percent in the first five years of ownership.”
