EV resale values: steep depreciation is documented, but Australia's used market turned in 2026

The core depreciation gap, in Australian data

The statistical picture in Australia remains tough for electric cars. AADA and AutoGrab data reported in 2025 showed new EVs losing around 25 per cent of their value in the first year, against 11.5 per cent for petrol cars and just 1.7 per cent for hybrids. Over a longer horizon, AutoGrab's 2024 report, the most recent published dataset cited by Drive-Electric, put EV retention at roughly 68.7 per cent after two years and 60.3 per cent after three, compared with 92.4 per cent for hybrids at the three-year mark. ²⁵

Model-level data from Pickles and Datium Insights from September 2025, reported by Gridly, shows how wide the spread is at two years old: the BYD Seal led with around 78 per cent retained and a typical used price near $47,000, while the Tesla Model Y sat at 58 per cent ($40,332), the Model 3 at 54 per cent ($35,284), the BYD Atto 3 at 54 per cent and the MG4 at 50 per cent. For comparison, a Toyota RAV4 retained 88 per cent over the same window and no EV came close. ¹

The drivers are mostly market forces rather than mechanical failure, in Gridly's analysis. Repeated new-car price cuts by Tesla, BYD and MG through 2023 and 2024 repriced used examples almost overnight, rapid generational improvements in range and charging made older cars look dated, a stream of cheaper Chinese entrants reset buyer expectations, and battery EVs made up only about 1.1 per cent of used sales in 2025, a thin market where sentiment moves prices hard. ¹

Battery health: the fear versus the data

Battery anxiety is a pricing factor the engineering data does not fully support. Geotab's 2024 study of thousands of EVs, cited by Gridly, measured average degradation at just 1.8 per cent per year, and Tesla's 2023 Impact Report shows Model 3 and Model Y packs retaining about 85 per cent of capacity after 320,000 km. ¹

A larger Geotab analysis of more than 22,700 electric vehicles across 21 models, reported by Zero Carbon Drive, puts the average slightly higher, at 2.3 per cent capacity loss per year and a projected 81.6 per cent state of health after eight years. Usage matters: cars charged mostly on AC lose about 1.5 per cent a year, while heavy users of high-power DC fast charging lose about 3.0 per cent, a spread that separates an EV that sells easily from one that sits on the forecourt. ³

The industry has responded to the confidence problem directly. RedBook Inspect, the NRMA from 2025, and auction house Manheim through its AVILOO partnership all now offer independent battery health certificates in major Australian cities. There is no government mandate, but a used EV with a verified state-of-health report is an easier sell, which supports prices, according to Gridly. ¹

The 2026 turnaround in the used market

The Australian used EV market flipped sharply through 2026. According to AADA figures reported by Gridly, used EV sales jumped 138 per cent month-on-month in March to 7,557 units as petrol prices spiked toward $2.50 a litre, while listings fell 38 per cent. AADA chief executive James Voortman said rising fuel prices are pushing Australians toward used EVs. ¹

Across the first half of 2026, AADA figures cited by Gridly and Drive-Electric show used battery EV sales grew 54.6 per cent and average days-to-sell fell from over 60 in January to under 40 by June, with used values stabilising since January and upward pressure since March. Drive-Electric also notes EVs typically took 55 to 87 days to sell used against 45 to 61 days for hybrids in 2025, underscoring how much faster the market has moved this year. ¹⁵

Manufacturers have moved to lock in a floor. In July 2026 Tesla partnered with finance company Driva to offer guaranteed future value loans on new Model 3 and Model Y purchases, giving buyers a contracted minimum resale value with the option to hand the car back at the end of the term. Both Gridly and Drive-Electric read this as a signal that the freefall era in EV depreciation may be ending. ¹²

Buyers have noticed the discount. Savvy and RedBook data from March 2026, cited by Drive-Electric, shows a 2022 Tesla Model Y RWD now around 48 per cent cheaper than its original price and the BYD Atto 3 down roughly 39 per cent. ²

What the international numbers show, and where they differ

US data confirms the longer-run gap but with differing headline figures. An iSeeCars analysis of more than 950,000 five-year-old used cars sold between March 2025 and February 2026, reported by Zero Carbon Drive, found EVs lost an average of 57.2 per cent of value over five years against 41.8 per cent for all vehicles, with hybrids at 35.4 per cent and trucks at 34.2 per cent. The Tesla Model 3 was the best mainstream performer at 54.6 per cent lost, and the Nissan LEAF the worst at 63.1 per cent. ³

DAX Street, meanwhile, cites a large US depreciation study of more than 800,000 used car sales finding EVs lost nearly 58.8 per cent of value over five years against roughly 45 per cent for all vehicles. The two studies differ on both the EV figure and the market average, and neither is an Australian dataset, so the exact percentages should be treated as US-market indications rather than a single settled number. ⁴

The 2026 US market also confounded forecasts. iSeeCars, reviewing 1.7 million used cars, found average used EV prices rose 3.5 per cent between the expiry of US federal EV credits on 30 September 2025 and January 2026, with used Teslas up 4.3 per cent from $30,040 to $31,329 while non-Tesla EVs fell 3.6 per cent from $24,629 to $23,738. Over the same period the used EV price premium over comparable petrol cars narrowed from more than $10,000 in early 2023 to roughly $1,000. ³

DAX Street's analysis points to rapid technological advancement, aggressive manufacturer price cuts, oversupply from returning lease cars, financing caution and battery-health uncertainty as the structural causes, and suggests values could stabilise as battery technology matures and improvement becomes incremental. ⁴

Novated leases, residuals and which models hold value

For novated lessees, the depreciation question becomes contractual. ATO determination TD 93/142 sets minimum residual values of 46.88 per cent of cost after a three-year lease, 37.50 per cent after four years and 28.13 per cent after five. Gridly notes these percentages were calibrated to petrol-car depreciation: against the Pickles two-year data, a Model 3 at 54 per cent leaves little margin over the three-year residual, and an MG4 at 50 per cent after two years would likely be underwater. If market value at lease end sits below the residual, the gap is the lessee's to pay. ¹

Eligibility also differs between new and used cars. Drive-Electric cautions that the FBT exemption on a used-EV novated lease is possible only if the vehicle was first held or used after 1 July 2022, unlike the full exemption available on new vehicles within the threshold, and recommends confirming eligibility directly with a lease provider before assuming a used EV qualifies the same way. ²

On model choice, Drive-Electric identifies the strongest current Australian resale performers as the BYD Atto 3 in original and Extended Range form, the 2025 Tesla Model Y Juniper, the Kia EV6 and the Hyundai Ioniq 5, all combining strong used demand with modern 800V or advanced 400V charging architecture. It also cautions that luxury EVs over $100,000 have historically lost the most value of any EV price bracket, in some cases close to half within five years, and that most EVs carry 8-year, 160,000 km battery warranties that transfer to subsequent owners for the remaining term. ⁵²