ITALY. Decline in car residual value after 5 years. Best LPG, worst EVs. Similar situation in Poland, fortunately and unfortunately

Quattroruote Professional has created in Italy a table showing the average residual value loss after five years for cars with different types of propulsion. Since the Italian market is similar to the Polish market in many ways—LPG has long been popular there as well as here as a cheaper alternative to expensive gasoline, and despite that, resistance to electric cars remains strong—we decided to take a look at these studies. It seems we are in times that are both bad and good at the same time.

How different car models lose value

According to Quattroruote Pro’s research, the value loss after five years is as follows (source):

LPG: -47 percent, down to 53 percent of the new vehicle’s value,

gasoline: -47.9 percent, down to 52.1 percent,

CNG: -49.9 percent, down to 50.1 percent,

diesel: -51 percent, down to 49 percent.

Plug-in hybrids: -56.2 percent, up to 43.8 percent,

electric vehicles: -61.5 percent, up to 38.5 percent.

In short, a five-year-old electric vehicle is worth less than 2/5 of what it cost when new in 2021. This is both good and bad news. It’s bad because those who decided to buy an electric car will have to expect a larger loss when selling it. It’s also bad because the projected residual values are based on historical data and estimates, so electric vehicles will require higher upfront payments and higher monthly payments for the next few years.

Those who bought a Tesla Model 3 or Model Y a few years ago paid a sort of wealth tax

The news is good at the same time, because sudden technological progress has always been accompanied by large price drops at first. The earliest phones, computers, and memory devices were incredibly expensive, but rising demand stimulated production capacity and competition, which ultimately led to increasingly affordable prices. Those who bought electric vehicles five years ago paid more for them, while those buying today pay less, so they may be less cautious when calculating the benefits and cost-effectiveness — they just need to consider charging from a wall outlet against fuel prices.

Do electric cars’ residual values have a chance of recovering? Yes, but traditional manufacturers will do everything they can to prevent this from happening too quickly, as they still rely on selling gasoline models. High list prices mean that paper losses will remain significant, even if an electric car is subsidized and partially offset by various benefits (higher depreciation, no parking fees, time saved thanks to bus lanes). The biggest breakthrough might come when societies realize that batteries and electric motors can cover hundreds of thousands of kilometers without repairs—and the myth that “the battery dies after two years” is just that—a myth.

Renault Scenic E-Tech Electric’s interior showing the battery (c) Renault

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