How vehicles hold their value is a crucial question for OEMs, fleets and retailers, and with more EVs entering used car market, it’s more important than ever. EV adoption is growing, price sensitivity is returning and stock availability is becoming more consistent, meaning EV residual values are playing a crucial role in shaping retail pricing, part-exchange valuations and remarketing decisions.

While petrol and diesel vehicle depreciation is familiar territory, the depreciation of EVs is unfamiliar territory for the industry – something that continues to shift as the used EV sector matures. Our data shows that buyer confidence is growing thanks to more stable pricing and better battery reporting, but forecasting remains a challenge as technology, incentives and supply evolve at pace.

In this article, we explore how EV and ICE vehicles depreciate differently, what this means to dealers, fleets and OEMs, and what today’s EV market signals for the used market in 2026 and beyond. 

Depreciation affects every vehicle on the road, impacting total cost of ownership and strategic planning across the automotive sector. 

For internal combustion engine (ICE) vehicles like petrol and diesel, depreciation models are stable and well understood, consisting of early rapid value loss, followed by gradual stabilisation. Factors influencing ICE car resale values include the vehicle’s age, mileage, fuel type and ongoing running costs. These predictable curves, backed by decades of data, allow dealers, fleets and OEMs to reliably forecast and strategise stock supply. 

EV depreciation, however, is a nascent industry and much lower volumes – albeit growing year-on-year. It’s also impacted by technology that is evolving fast, thanks to short product cycles led by increasing zero emission vehicle (ZEV) mandate targets. This causes values to be more sensitive, and forecasting, more challenging. 

Factors like battery health, warranty cover, charging capability and range performance, all have an impact on EV residual values and depreciation rates.

Thanks to standardised battery health reporting, improved range and mature warranties, EV depreciation is stabilising in 2025. 

Early electric models depreciated at rapid rate in comparison to ICE vehicles, thanks to market uncertainty, evolving technology, and limited demand. However, research shows the gap is closing as the market matures, battery performance improves, and buyer confidence grows. Strong second-hand supply from salary sacrifice and fleet renewals stabilises depreciation further, with over 2,000,000 used EV sales in Q3 2025, a 2.8% increase YoY. 

These trends create a more predictable used EV market, with average EV depreciation sitting at 38-42% after three years vs. 35-40% for petrol vehicles, in November 2025. Giving retailers and remarketing teams clearer guidance on residual values. 

As EV depreciation become more predictable in 2025, residual values are beginning to stabilise too. Early volatility, driven by uncertainty around technology, battery life and market demand, is easing, and residual values are now more clearly tied to tangible factors like battery health and charging performance. 

This allows retailers, fleet operators and OEMs approach electric vehicle residual values with greater confidence, even though forecasting remains more dynamic than for ICE vehicles, due to faster product cycles and evolving incentives.

While EV depreciation vs ICE still shows greater market sensitivity, the overall trend is positive. Stabilising depreciation is creating healthier, more reliable EV residual values – an essential step toward a more balanced used EV market.

The question ‘do EVs depreciate faster?’ has shaped much of the electrification conversation. Early on, the answer was largely, yes. Rapid technology cycles, consumer uncertainty and inconsistent battery transparency led to higher average EV depreciation compared to petrol and diesel vehicles. 

But in 2025, the picture is far more balanced due to range and charge performance plateauing, a better understanding of running costs, standardised battery health reports and increased supply and demand in the used market.

EV depreciation vs ICE still shows more variation, however, due to differences in performance across EV models. Newer long-range models with faster charging tend to depreciate slower, while early-generation vehicles with outdated tech and shorter ranges continue to underperform.

So, when discussing if EVs depreciate faster today, the reality is far more nuanced than in the past.

As EV depreciation continues to settle and converge with ICE vehicles, every part of the automotive sector stands to benefit from more predictable EV residual values. 

For retailers, stabilising electric vehicle residual values and clearer depreciation patterns support more confident decision making in the used EV market:

• More accurate appraisals: Pricing part-exchanges becomes more reliable with the help of stabilising average EV depreciation.
• Healthy stock-turn: Predictable residual values make integrating EVs into stock supply easier, while reducing volatility.
• Increased market competitiveness: EVs aren’t going anywhere and dealers with battery health reports and reliable valuations will lead the way. 

Balanced EV residual values mean greater confidence in lifecycle planning and whole-life cost forecasting for fleet operators:

• More accurate TCO modelling: Stable EV depreciation makes it easier to predict cost exposure over a 3–4-year cycle.
• Competitive pricing: Stronger residual values allow fleets to offer more competitive rates. 
• Lower risk at the defleet stage: Predictable used values reduce risk when defleeting. This is particularly important now, as higher volumes of EVs will reach remarketing channels in 2026 due to cycles ending. 
• Better strategic planning: Data-led forecasting supports better strategic EV adoption, essential for hitting sustainability targets across mixed fleets.

For OEMs, the benefits lie in new opportunities, thanks to stable electric vehicle residual values clearly connecting to product quality and battery performance:

• Stronger finance propositions: Improved residual values enhance competitiveness across PCH, PCP and fleet channels. 
• Model perception: EVs with longer range, stable software support and strong battery performance show the lowest depreciation rates, meaning certain models stand out among the rest.
• Predicable planning: Stable depreciation allows for more accurate forecasting for future product launches and pricing strategies. 

Looking ahead to 2026, it’s clear that the story around EV residual values is heading in a positive direction. No longer defined by early volatility, the convergence of EV depreciation vs ICE improved batter transparency and rising supply and demand, is reshaping how the used EV market assess value, risk and opportunity. 

Challenges do remain, particularly around technology evolution, incentive shifts and infrastructure growth. However, a more balanced, data-rich market is emerging. One where EVs hold their value with increasing reliability, and depreciation is less disruptive across the lifecycle. 

The priority for the automotive sector is to continue investing in transparency, educating consumers with reliable resources, and embracing EV insights that help create confidence in the used EV market.