[calvinist]

ArsTechnica reporting on a new study of the total cost of ownership of ICE vehicles, BEVs, and PHEVs.

https://arstechnica.com/cars/2017/12/does-lower-total-cost-of-ownership-boost-electric-car-sales/

They report that the TCO of BEVs is lower than ICE vehicles, but that the TCO of PHEVs is higher. While the text of the article does not mention it, a look at the graph shows this difference is due to the higher depreciation of PHEV's vs. BEV's. I suspect this is due to public ignorance of PHEV's more that technical issues.

 

[viking79]

I don't think it is fair to compare them yet, technology is changing prices too quickly. Newer PHEVS like the Prius Prime and Hyundai Ioniq are fairly cost effective and should have a much lower TCO, so older PHEVs that are very expensive and depreciate quickly will likely throw off the stats initially.

 

[DonC]

I don't think most people can think about TCO. They want to know what the monthly payment is.

Obviously cost is a big deal. There is no way a Model X is going to be cost competitive with a Corolla. This brings up the issue of what you're comparing. If manufacturers (other than Tesla which has done a good job in this area) marketed the higher performance of EVs better, the cost comparisons would look a lot better since the comparable ICE vehicle would cost more.

 

[calvinist]

The Volt has been around long enough to get decent statistics. Admittedly, that is only one model, but the difference in depreciation is stark.

I would have expected, from a technical perspective, the depreciation to be dominated by falling battery costs. That should cause a BEV, having a larger battery pack, to depreciate more than a PHEV. But the reverse appears to be the case.

 

[MikeyCVolt]

Depreciation is not a cost... until you sell/trade it. It also works both ways: I got $10k off a slightly used 2017 model, in 2017.

Mike

 

[Shivetya]

except all current BEVs are nearly a hundred percent obsolete already due to limits in recharge rates and range. its going to be first gen leaf levels of depreciation all over again within a few years

 

[Steverino]

except all current BEVs are nearly a hundred percent obsolete already due to limits in recharge rates and range. its going to be first gen leaf levels of depreciation all over again within a few years

I don't quite get that. ICE cars don't become obsolete when someone comes out with a turbo version, or a higher MPG gas engine. If the car served it's purpose when it was bought, it still does regardless of whether a new model has an improved range or speed, etc.

I don't consider my 2011 Volt obsolete. It still runs great, still gets me from point A to B. And getting from A to B is the primary purpose of a car for most people.

 

[hellsop]

I don't consider my 2011 Volt obsolete. It still runs great, still gets me from point A to B. And getting from A to B is the primary purpose of a car for most people.

Certainly is for me. Cars are CONSUMABLE. They're not investments. Someone rumpled my door. I got it fixed because that door wouldn't open. Someone dripped white paint on my bumper. I'm NOT getting that fixed because it effect nothing but looks, and that doesn't affect my consumption/use of the thing.

 

[jcanoe]

I have, in the past, kept new automobiles far longer than the average (I have been told that in my area the average is 4.5 years.) I have kept several cars for as long as 12 years but no more. The pace of change in automobile technology whether it involves safety, performance, economy or entertainment has been accelerating as never before. Going forward I don't think I will keep any new car longer than about 5 or 6 years. I might even lease my next vehicle as a reduced mileage lease would probably suit my needs. In the past, when a car stopped being reliable and left me stranded on multiple occasions, while spending $3-4k per year maintaining the car, I knew it was time to say goodbye. Of course, when I traded in my 12 year old vehicle I did not expect much nor did I receive much $ from the dealer but we had a good run.

 

[Eagleco]

With the tax credit (s), depreciation is a little more complicated to figure. Getting 10k off on a used 2017 also means not getting the $7500 Federal tax credit, and any possible state credit. So that brings the savings down to $2500 or less, assuming one qualifies for the full credits available. It's easy when buying a new Volt to get 4k or more off msrp so that more than wipes out the rest of the savings on depreciation.

 

[DonC]

The Volt has been around long enough to get decent statistics. Admittedly, that is only one model, but the difference in depreciation is stark.

With the tax credit (s), depreciation is a little more complicated to figure.

+1. The entire meme of EVs depreciating faster than average is simply a function of people not understanding how to calculate depreciation. If you pay $36K - $7.5K - $1.5K, then the car cost $27K. Not sure I'd call that complicated but obviously some have a hard time getting their head around how depreciation works.

 

[Loboc]

+1. The entire meme of EVs depreciating faster than average is simply a function of people not understanding how to calculate depreciation. If you pay $36K - $7.5K - $1.5K, then the car cost $27K. Not sure I'd call that complicated but obviously some have a hard time getting their head around how depreciation works.

Exactly. Calculate from the net transaction cost not the MSRP. ELR is an outlier, but, I’m OK with a 4-yr-old (from build date) car that netted out to $43k now worth $22k. Saying it’s a $80,600 car worth $22k is not reality.

 

[Norton]

... If manufacturers (other than Tesla which has done a good job in this area) marketed the higher performance of EVs better,...

I'm trying to think of Tesla 'marketing'....

except all current BEVs are nearly a hundred percent obsolete already due to limits in recharge rates and range. its going to be first gen leaf levels of depreciation all over again within a few years

That's a funny position to take. I think the Bolt would be perfect as my next car. And the recharge infrastructure is getting better every day!
How soon before I can get a used Bolt at a "highly deprecated level"?

... Cars are CONSUMABLE. ...

+1
They're tools to haul ourazz down the road. And if they do it as inexpensively as possible and with almost no muss or fuss with routine maintenance, all the better!

 

[jbakerjonathan]

Certainly is for me. Cars are CONSUMABLE. They're not investments. Someone rumpled my door. I got it fixed because that door wouldn't open. Someone dripped white paint on my bumper. I'm NOT getting that fixed because it effect nothing but looks, and that doesn't affect my consumption/use of the thing.

I completely agree with your point of view. Let me say this, however, I don't wear pants with tears in the pants leg; same thing with dents and missing paint on my car. That's just my thing. When the pants become obviously old and thread-bare, they are re-purposed for other use. My Volt, similarly, won't be kept up cosmetically then.

I plan to use up most of the value in my 2014 by making road trips. It is such a comfortable and safe car to make those trips with.

To make the comparison of used car prices more realistic, shouldn't a percentage of the $7,500 tax credit be added to the prices shown by NADA, Edmunds and Black Book for Volts? I don't have data to back this up, but I think that the original owner reduced the purchase price with that tax credit, effectively making the car less expensive for himself, and that is reflected in the street price somewhat.

 

[bjrosen]

The resale value of an EV differs from a standard car because of the rapid obsolescence of EVs which doesn't apply to ICE cars which are a mature technology. The effect of the government subsidies are trivial to take into account, just subtract them from the sticker price because that reflects the actual price. When you buy a standard car it loses a big junk of it's value when you drive it off the lot but after that it's mostly a function of wear and tear and the expected remaining life of the car, both the buyer and the seller will judge the value this way. However with an EV the valuation is more like phones then it is for cars. A 2015 Volt became dramatically less valuable when the 2016 Volt came out even if it was only a couple of months old. The introduction of the Bolt dried up at least half of the market for Gen 2 Volts (judging from new Bolt an Volt sales figures) and that's going to be reflected back into the resale value of Gen2 Volts. When the next generation of GM EVs hits the market in a couple of years the Bolt will lose a huge chunk of it's resale value. It's only when the technology stabilizes will you see EV resale value curves going back to standard car resale values, my guess is that will take another 10 years or so. At some point the range of EVs will hit a more than good enough point, 450-500 miles, and the cost of the battery drop to a point where it no longer dominates the build cost of the car. After that the modest improvements in new cars won't have much effect on the value of older cars.

 

[DonC]

The resale value of an EV differs from a standard car because of the rapid obsolescence of EVs which doesn't apply to ICE cars which are a mature technology. The effect of the government subsidies are trivial to take into account, just subtract them from the sticker price because that reflects the actual price. When you buy a standard car it loses a big junk of it's value when you drive it off the lot but after that it's mostly a function of wear and tear and the expected remaining life of the car, both the buyer and the seller will judge the value this way. However with an EV the valuation is more like phones then it is for cars. A 2015 Volt became dramatically less valuable when the 2016 Volt came out even if it was only a couple of months old. The introduction of the Bolt dried up at least half of the market for Gen 2 Volts (judging from new Bolt an Volt sales figures) and that's going to be reflected back into the resale value of Gen2 Volts. When the next generation of GM EVs hits the market in a couple of years the Bolt will lose a huge chunk of it's resale value. It's only when the technology stabilizes will you see EV resale value curves going back to standard car resale values, my guess is that will take another 10 years or so. At some point the range of EVs will hit a more than good enough point, 450-500 miles, and the cost of the battery drop to a point where it no longer dominates the build cost of the car. After that the modest improvements in new cars won't have much effect on the value of older cars.

This position is easily debunked. Compare the depreciation on the Volt https://www.edmunds.com/chevrolet/volt/2017/st-401626581/cost-to-own/ with the depreciation on the Honda Accord https://www.edmunds.com/honda/accord/2017/sedan/cost-to-own/. Note that the only difference in the pattern is that the Volt "depreciates" much more the FIRST year than the Accord. If your claim that its technological obsolescence is correct the depreciation should be smaller in earlier years and larger in later years as the tech becomes increasingly dated. Since the opposite occurs, the technological obsolescence argument fails completely.

The comparison also shows the Volt depreciates very much like the Accord, which is considered to depreciate less than average. Simply take $7500 off the Volt's first year of depreciation and viola, its percentage depreciation is exactly the same as the Accord. If this isn't clear enough, compare the Volt depreciation to that of the BMW 5 series. https://www.edmunds.com/bmw/5-series/2017/cost-to-own/. In the first year the Volt depreciation is higher than the 5 Series, but for every year after that, years 2-5, the depreciation on the 5 Series is DOUBLE that of the Volt's.

It's pretty clear that the tax credit and other subsidies for the Volt not only play more than a trivial role in the depreciation, but that they completely account for the difference between the depreciation rates.

 

[DonC]

I'm trying to think of Tesla 'marketing'....

You think all these articles about Tesla are generated by hard working journalists? Funny. Or that all posters on EV sites are simply fans?

 

[Steverino]

It's pretty clear that the tax credit and other subsidies for the Volt not only play more than a trivial role in the depreciation, but that they completely account for the difference between the depreciation rates.

Clear to me as well. Not so clear to many who wail about the Volt's depreciation because they never factored in the $7500 that effectively dropped the purchase price by....$7500. Instead, people are essentially claiming that the Volt "depreciated" by $7500 without noting that they got that $7500 back as a tax credit, same as cash in hand.

 

[Norton]

You think all these articles about Tesla are generated by hard working journalists? Funny. Or that all posters on EV sites are simply fans?

I honestly don't know what to think. What are you saying here?

I assume all the articles are written and posts are posted by people that think Tesla is a one of a kind wonder car, unlike any other EV ....
I'm just asking; Is there a Marketing Dept at Tesla HQ? Or Advertising Dept? (Not that GM knows how to do it....)

 

[Eagleco]

Not only is it the tax credit that skews depreciation but also the discounts from msrp, at least compared to something like a Honda or Toyota. They have good resale value, but you pay top dollar to start with too.

We just bought a 2018 Volt Premier in November for $4600 off msrp, plus we got a $700 Costco card, and 50% off accessories up to $200 of savings. Add in the $7500 tax credit and I would expect a big first year depreciation from msrp, but so what? I know other Volt buyers have done even better.