EV vs. ICE: Depreciation and residual values explained

How vehicles hold their value is a crucial question for fleets, retailers and original equipment manufacturers (OEMs). With more EVs entering the used car market, understanding future vehicle values is more important than ever.

Our data shows that buyer confidence is growing thanks to more stable pricing and better battery reporting. However, forecasting remains a challenge as technology, incentives and supply continue to evolve. 

EV adoption shows no signs of slowing. With monthly battery electric vehicle registrations increasing by 44.5% year on year, more EVs will be entering the used market. As this volume reaches resale, EV residual values play a crucial role in shaping retail pricing, part-exchange valuations and remarketing decisions. 

While EV adoption continues to grow, the used EV market remains less mature than the petrol and diesel market. Variable factors make EV residual values more sensitive to change: 

• Vehicle range and charging capability can have a greater influence on EV residual values, making forecasting more complex.
• EV values are also affected by rapidly evolving technology and short product cycles, driven in part by increasingly ambitious zero emission vehicle (ZEV) mandate targets.

Depreciation patterns for internal combustion engine (ICE) vehicles are well established.

• These vehicles typically experience an initial, sizeable drop in value followed by gradual stabilisation.
• Patterns are supported by decades of market data, often specific to manufacturer and vehicle type.

This allows dealers, fleets and OEMs to forecast residual values with a high degree of confidence and adjust strategic direction appropriately.

Charging functionality is an increasingly important contributor to EV residual values because businesses and consumers demand practical long-distance usability. Vehicles capable of optimised charging are attractive on the used market as they offer more day-to-day convenience.

Up-to-date software and firmware matter, too. Many EVs rely on scheduled updates that improve efficiency, performance and battery conditioning cycles. Vehicles with a verified update history tend to hold their value better, as buyers increasingly factor this into their assessment of overall battery condition.

Vehicle range remains a key consideration for used EV buyers. Models that continually meet real-world driving requirements are typically better positioned to retain value. 

Strong maintenance records remain one of the most reliable ways to protect EV residual value. While EVs have fewer moving parts than petrol or diesel vehicles, buyers still expect a complete and verifiable service history.

Missing records, inconsistent servicing intervals or incomplete digital documentation can quickly undermine buyer confidence. The service areas that influence EV resale value most heavily include:

• Battery cooling systems: Thermal regulation maintains battery performance and reduces long-term degradation.
• Tyre condition: Higher vehicle weight and instant EV torque can accelerate wear, making regular tyre inspection.
• Brake maintenance: Regenerative braking can reduce wear, but brakes should still be regularly inspected.

First impressions continue to play a significant role in vehicle valuation.

Regardless of battery condition or vehicle age, cosmetic damage and incomplete presentation can stifle interest. Comprehensive vehicle preparation services support dealers looking to maximise returns.

For fleets and remarketing teams, consistent presentation standards help to boost engagement and support residual value outcomes, no matter the vehicle type.

For car dealers, greater clarity around EV depreciation patterns supports more confident decision-making throughout the sales process:

• More accurate appraisals: Consistent depreciation trends support consistent part-exchange valuations.
• Healthy stock-turn: Growing confidence in future values makes it easier to source and price EV stock.
• Increased market competitiveness: Dealers that can demonstrate reliability and provide consistent valuations are better positioned to compete.

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 forecasting easier over a typical cycle.
• Competitive pricing: Stronger residual values may support favourable monthly pricing for fleet operators.
• Lower risk at the defleet stage: Consistent used values help reduce risk when defleeting, particularly as more fleets reach the end of their cycles.
• Better strategic planning: Data-led forecasting supports strategic long-term EV adoption, essential for hitting sustainability targets across mixed fleets.

For OEMs, improving residual values provide a link between product quality, battery performance and long-term market demand:

• Stronger finance propositions: Improved residual values can boost competitiveness across PCH, PCP and fleet channels. 
• Model perception: EV models with longer range, reliable software support and strong battery performance show the lowest depreciation rates and stand out in the market.
• Confident planning: Greater confidence in EV resale values supports future product, pricing and volume planning decisions. 

• Confirm SoH reading
• Attach battery testing report

• Ensure firmware is up to date
• Provide proof of recent software updates
• Confirm charging cable type and condition

• Meet all EV service history requirements
• Include most recent inspection reports
• Provide evidence of tyre/brake checks

• Check tyres have minimum tread depth and even wear
• Complete a brake system inspection
• Replace wipers, fluids and filters if necessary

• Complete cosmetic appraisal
• Carry out interior reconditioning
• Commission professional detailing where required
• Package all vehicle documentation clearly

• Arrange high-quality photography
• Supply accurate, transparent descriptions
• Align the reserve price with used EV values
• Include battery SoH data on the listing

In 2026, the picture is becoming more balanced. This is due to plateauing range and charging performance, standardised battery health reports and a better understanding of running costs. Despite growing supply and demand in the used market, challenges remain.

The priority for the automotive sector is to continue investing in transparency for consumers and embracing EV insights to build momentum and confidence in the used EV market.