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Electric vehicles (EVs) tend to get a bad rap. Unfortunately, part of the anti-EV narrative resides in the segment’s higher-than-average depreciation rates. The news is the same for half of the brand’s current lineup, the Model S and Model X. However, the news isn’t all bad for the high-voltage marque; the diminutive Tesla Model 3 comes in well below the nationwide average for electric vehicles.

Two Teslas depreciate above the segment average, while the Model 3 shines with value retention

A blue Tesla Model 3, one of the EVs with the lowest depreciation rate, kicks up water on a road.
Model 3 | Tesla

According to the latest data, the Tesla Model S has the highest average depreciation in the first five years of ownership. At 55.5%, the luxury electric sedan loses an average of 6.4% more of its original value than the nationwide EV segment average. 

ModelAverage 5-year depreciation
Model S55.5%
Model X49.9%
Model 342.9%
Nationwide EV average49.1%

However, even with an average five-year depreciation of over 50%, the Tesla Model S doesn’t even crack the top 10 for all vehicles. No, the Model S snags the No. 19 spot by returning the same average five-year percentage as the Mercedes-Benz GLS and Lincoln Navigator L. Still, the Tesla sedan’s shocking value loss means a five-year-old Model S could be worth around $60,145 less than when it was new. 

On the other hand, the Model X was just 0.7% off the nationwide average for electric vehicles. What’s more, the luxury SUV retained a higher percentage of its original MSRP than popular economy EVs. For instance, the Chevrolet Bolt EV and Nissan LEAF dropped 51.1% and 50.8%, respectively.

Still, the Model 3, Tesla’s most affordable EV, loses 42.9% of its original value in the first half-decade. That’s not quite enough to land the Model 3 on the list of vehicles with the most value retention. However, it’s enough to put the Model 3 ahead of several popular hybrids, like the now-discontinued Toyota Avalon Hybrid and the Hyundai Sonata Hybrid. 

It’s not just Tesla; EVs depreciate more than other segments

The electric vehicle segment’s trend for losing value isn’t limited to Tesla. On average, EVs lose 10.3% value than the rest of the market overall. Still, even with the highest segment average, EVs have improved by a staggering 18% since 2019. 

SegmentAverage depreciation (2023)Average depreciation (2019)
Overall 38.8%49.6%

Still, the Tesla Model 3’s value retention is impressive for the segment, with a five-year depreciation closer to the SUV segment’s 41.2% average.

Source: iSeeCars


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