McLEAN, Va. -

There are modest improvements on the horizon, but it appears the cumbersome used-car depreciation challenges experienced in the plug-in electric vehicle segment will linger for some time.

That’s according to a new white paper from NADA Used Car Guide dissecting this slice of the alternative-fuel market titled “Plug-in Electric Vehicles: Market Analysis and Used Price Forecast.”

Annual rates of used-vehicle price depreciation for 2012 model-year plug-in vehicles (31.5 percent) are more than twice as high as those for gasoline-powered vehicles (12.4 percent) and hybrids (14 percent), NADA indicated.

And while that gap will likely narrow over the next two years — annual PEV depreciation is forecasted to dip to 27.4 percent for 2014 model-year vehicles, while gas-powered depreciation climbs to 16.8 percent and hybrid moves to 18.5 percent — don’t expect the “stout challenges” to go away any time soon.

NADA suggested that, “for the foreseeable future, it remains that the value proposition of a plug-in EV will be substantially worse than that of its two counterparts.”

Its analysis added: “In dollar terms, this means a plug-in EV worth $20,000 in 2012 is predicted to lose $9,792 of its value by the end of 2014, while similarly priced gasoline and hybrid vehicles are expected to lose $5,573 and $6,455, respectively, over the same period.

“To put it another way, the steeper rate of depreciation will mean a more expensive plug-in EV will actually be worth less than an ICE-equipped car after a period of time,” NADA continued.

But, there are some silver linings.

Shifting to the new-car retail market, NADA acknowledges the “potential for plug-in technology to assume a large share of the automotive marketplace in the future,” despite its assertion that plug-in EVs will continue to be a “fringe alternative powertrain” for some time.

“Plug-in EVs face an uphill battle on the used side of the market as well, and not just because of unfavorable market conditions. Concerns surrounding durability, maintenance and longevity as EVs age affect used prices more so than prices for their ICE counterparts,” NADA indicated.  “All other influencing factors being equal, this imposes a higher rate of depreciation on electric vehicles, especially early on in the technology’s lifecycle — exactly where plug-in EVs are today.”

However, the analysis points out, “this novelty will wear off over time and plug-in EV depreciation will ultimately benefit as a result.”

For more background on the plug-in electric market, stay tuned to Auto Remarketing Today for Part II of this story.
 

Joe Overby can be reached at joverby@autoremarketing.com. Continue the conversation with Auto Remarketing on both LinkedIn and Twitter.