EV Depreciation Crisis Threatens Global Electric Vehicle Adoption

Electric vehicles (EVs) are facing a deepening depreciation crisis that threatens to undermine adoption rates worldwide. Analysis of over 1.1 million used-vehicle transactions between November 2022 and October 2023 found that EVs lose approximately 49.1 % of their value within five years on average, about ten percentage points more than traditional petrol or diesel cars.

Several interconnected factors are driving this sharp decline. First, many EVs were initially sold with heavy manufacturer incentives and government subsidies, inflating their upfront cost and creating a difficult benchmark for resale value. Second, rapid advances in battery technology and charging infrastructure mean older models, even those only a few years old, feel outdated and less attractive to buyers.

The crash in used-EV values is triggering broader consequences. Lenders and financial firms that base loans on expected residual values are now more exposed. In some markets, EV loan interest rates are already higher, loan-to-value ratios lower, and repayment periods shorter compared with conventional-vehicle loans.

For fleets and ride-hailing companies, the problem is particularly acute. Vehicles intended for high-use service often accumulate many miles quickly, accelerating battery wear and resale risk. When resale value and expected lifetime collapse together, the business case for electric fleets becomes unstable.

Editor’s View
For the tyre industry and broader mobility supply chain, the depreciation crisis in EVs is a cautionary signal. Tyre makers often focus on durability, wear-performance, and rolling resistance, but much of the value of a tyre in an EV context is also tied to the lifespan and economics of the vehicle itself. With resale value under pressure, total cost of ownership models matter more than ever.

In India, other Asia-Pacific markets, and emerging-economy regions, the challenge is even more pronounced. Second-hand markets are less developed, battery-health transparency is weaker, and infrastructure hurdles remain. Tyre manufacturers and aftermarket suppliers should regard this macro trend not as separate from their business but as deeply connected: if EV owners become more hesitant, replacement-tyre demand, service cycles, and product specifications may shift accordingly. Being proactive—offering warranties, aligning with vehicle-lifespan expectations, and engaging with electric-fleet operators- can help mitigate risk and position brands for the next phase of mobility.