EV residual value - aren't they supposed to be high?
Discussion
Before I settled on ordering the iX, I had thought about a Porsche Taycan as I heard their depreciation levels were very low, but I was surprised when the Porsche dealer gave me a quote for a 4 year PCP on a £120k Sport Turismo in which the Guaranteed Minimum Future value was under £44k.
So they believe the car will only retain 37% of value after 4 years and 40k miles?
I have heard that Model 3s don't depreciate very much, but what about other models from other manufacturers? Do you think depreciation for a lot of EVs will be savage as newer versions come out with more features, better range etc?
So they believe the car will only retain 37% of value after 4 years and 40k miles?
I have heard that Model 3s don't depreciate very much, but what about other models from other manufacturers? Do you think depreciation for a lot of EVs will be savage as newer versions come out with more features, better range etc?
The problem is that EV residuals are very storng now but no-one really knows what they will be in three years' time when automotive manufacturing has ramped back up.
Of course there's also an element of manufacturers charging whatever they think the market will bear. Right now they can lease as many cars as they can produce, so why take even a small risk with the GFV?
Of course there's also an element of manufacturers charging whatever they think the market will bear. Right now they can lease as many cars as they can produce, so why take even a small risk with the GFV?
This. They can shift every car they build and then some, so will make every penny they can.
At the end of the day with the PCP if you are so confident in the GFV being low it's not an issue, just buy the car at the end of the term and sell it on? It's leasing that's the real issue as no option to buy and still high monthlies.
At the end of the day with the PCP if you are so confident in the GFV being low it's not an issue, just buy the car at the end of the term and sell it on? It's leasing that's the real issue as no option to buy and still high monthlies.
Raspy, I think you're confusing GFV with depreciation. EV makers don't have a clue what the value of a new car will be in 4 years' time, and anyone 'renting' one will have to pay enough per month to cover the arse of the owner. They will always err on the side of caution to protect themselves.
Renting an EV for a few years with the option to buy will, I think result in very attractive balloon payments.
Worldwide under-capacity of lithium battery supply will take many years to sort itself out, so EVs will have far better resale values than their ICE counterparts.
Renting an EV for a few years with the option to buy will, I think result in very attractive balloon payments.
Worldwide under-capacity of lithium battery supply will take many years to sort itself out, so EVs will have far better resale values than their ICE counterparts.
Europa Jon said:
Raspy, I think you're confusing GFV with depreciation. EV makers don't have a clue what the value of a new car will be in 4 years' time, and anyone 'renting' one will have to pay enough per month to cover the arse of the owner. They will always err on the side of caution to protect themselves.
Exactly. And they will also only guarantee as much future value as they feel they need to in order to get the monthly payments down to a level that is judged affordable for the car in question. Right now they can't make EV's half as fast as they're demanded so people will happily pay a high monthly.. So why guarantee more of the future value than they need to? The cars are being ordered regardless.Car sales are a sellers market right now, an extreme sellers market. Nothing needs to be affordable for most people because just appealing to the 'happy to spend extra' minority of people is enough to sell/lease EV's as fast as they can push them out.
Yep, GFV is a way for manufacturer finance arms to tweak figures to get cars sold. At the extremes, doing very high GFV that they know they’re unlikely to get but it keeps cars rolling off the line to people paying x per month.
Absolutely no reason to do that when demand is high and supply is low, and Porsche would rather be lending you more at 7+% as it earns them more.
Tesla PCP is also around 37% GFV after 4 years. They sell all they can make so no need to incentivise.
Absolutely no reason to do that when demand is high and supply is low, and Porsche would rather be lending you more at 7+% as it earns them more.
Tesla PCP is also around 37% GFV after 4 years. They sell all they can make so no need to incentivise.
sjg said:
Porsche would rather be lending you more at 7+% as it earns them more.
That's upside-down. You're paying interest on the full amount borrowed, regardless of the GFV. A lower GFV means higher monthlies, so you're actually paying off the loan quicker, and thus paying less interest.
Mmmm, got to think that this is a generated number from a system that Porsche uses and delivers to their dealers. I can totally believe that they dont have the supporting data points to come up with something more reasonable and the Taycan has only been available for 18-24 months is it now? Not much to work on with 4 year values so its probably guessing and keeping the risk factors low.
I am guessing the monthly price is a bit steep as a result, but if it works, having a potential trade in difference might make it beneficial. Of course, this is how Porsche keeps you though - not that many people buy one, just keep rolling it into the next one with funny-money finance deals.
I am guessing the monthly price is a bit steep as a result, but if it works, having a potential trade in difference might make it beneficial. Of course, this is how Porsche keeps you though - not that many people buy one, just keep rolling it into the next one with funny-money finance deals.
raspy said:
Before I settled on ordering the iX, I had thought about a Porsche Taycan as I heard their depreciation levels were very low, but I was surprised when the Porsche dealer gave me a quote for a 4 year PCP on a £120k Sport Turismo in which the Guaranteed Minimum Future value was under £44k.
So they believe the car will only retain 37% of value after 4 years and 40k miles?
I have heard that Model 3s don't depreciate very much, but what about other models from other manufacturers? Do you think depreciation for a lot of EVs will be savage as newer versions come out with more features, better range etc?
£44k is a lot for a 4 year old car. Maybe the new price is what's wrong?So they believe the car will only retain 37% of value after 4 years and 40k miles?
I have heard that Model 3s don't depreciate very much, but what about other models from other manufacturers? Do you think depreciation for a lot of EVs will be savage as newer versions come out with more features, better range etc?
4 years is 50% of the battery warranty, 40k miles is 40%.
EVs are lifed items in a circular economy, it's a whole different game from buying a 911 and hoping to keep it forever.
Used EVs are expensive at the moment, partly because supply is very limited because so few were sold 5/4/3 years ago.
4 years' time is looking deep into a crystal ball, the market could be a whole different place by then.
Fairly likely people with £44k to spend will have some good options which aren't even being sold yet.
Meanwhile, the price is what the market will bear.
OutInTheShed said:
£44k is a lot for a 4 year old car. Maybe the new price is what's wrong?......
....EVs are lifed items in a circular economy, it's a whole different game from buying a 911 and hoping to keep it forever.
I think you need to have a look on Autotrader at the cost of a soon out of warranty 8 year old Model S. ....EVs are lifed items in a circular economy, it's a whole different game from buying a 911 and hoping to keep it forever.
A 'refurb' battery from Tesla is £10-15K, a brand new 90kWh battery (if Tesla will sell you one) is currently £20K and will give a 2014 P85S MORE range than a brand new Taycan S and not far off the range of a performance battery version of the Taycan.
Our X is coming up to 5 years old, I have no plans to sell it any time soon. Currently the battery has 6% degradation with 55K miles on it. I plan to replace the battery in roughly another 5 years time with a 90kWh pack, prices for should have come down by than (it has already dropped by around £5K in the last 12 months).
A used RWD P85 S is probably as close to the spirit of keeping an older performance ICE car on the road as you get interms of EVs. Tesla has made the OEM repair manual free/open access, Bosch have now developed third party toolboxes for the BMS if you don't want to pay for the Tesla stuff, and even the local garage down the road is more than happy to replace the air suspension our X.......
......in regards to future prices coming down....How many CPUs do these new cars have? How likely is China to escalate Taiwan in some form? As you say no one has a crystal ball, but I suspect prices are likely to go only in one direction.
Edited by gangzoom on Saturday 6th August 09:54
gangzoom said:
I think you need to have a look on Autotrader at the cost of a soon out of warranty 8 year old Model S.
A 'refurb' battery from Tesla is £10-15K, a brand new 90kWh battery (if Tesla will sell you one) is currently £20K and will give a 2014 P85S MORE range than a brand new Taycan S and not far off the range of a performance battery version of the Taycan.
Our X is coming up to 5 years old, I have no plans to sell it any time soon. Currently the battery has 6% degradation with 55K miles on it. I plan to replace the battery in roughly another 5 years time with a 90kWh pack, prices for should have come down by than (it has already dropped by around £5K in the last 12 months).
A used RWD P85 S is probably as close to the spirit of keeping an older performance ICE car on the road as you get interms of EVs. Tesla has made the OEM repair manual free/open access, Bosch have now developed third party toolboxes for the BMS if you don't want to pay for the Tesla stuff, and even the local garage down the road is more than happy to replace the air suspension our X.......
......in regards to future prices coming down....How many CPUs do these new cars have? How likely is China to escalate Taiwan in some form? As you say no one has a crystal ball, but I suspect prices are likely to go only in one direction.
I agree with you. I was originally looking at a used Model S or X, and prices of even high mileage cars from 2016/7 are on the increase, so that's why I went with something that's brand new in the end, in a spec that suits me, and could come from the factory in a couple of months. A 'refurb' battery from Tesla is £10-15K, a brand new 90kWh battery (if Tesla will sell you one) is currently £20K and will give a 2014 P85S MORE range than a brand new Taycan S and not far off the range of a performance battery version of the Taycan.
Our X is coming up to 5 years old, I have no plans to sell it any time soon. Currently the battery has 6% degradation with 55K miles on it. I plan to replace the battery in roughly another 5 years time with a 90kWh pack, prices for should have come down by than (it has already dropped by around £5K in the last 12 months).
A used RWD P85 S is probably as close to the spirit of keeping an older performance ICE car on the road as you get interms of EVs. Tesla has made the OEM repair manual free/open access, Bosch have now developed third party toolboxes for the BMS if you don't want to pay for the Tesla stuff, and even the local garage down the road is more than happy to replace the air suspension our X.......
......in regards to future prices coming down....How many CPUs do these new cars have? How likely is China to escalate Taiwan in some form? As you say no one has a crystal ball, but I suspect prices are likely to go only in one direction.
Edited by gangzoom on Saturday 6th August 09:54
I opted for Business Contract Hire too. Not interested in "purchasing" a brand new EV for long term ownership given how fast the tech is evolving. In 2025, who knows what the landscape will be like.
barryrs said:
The iX is quite an acquired taste, so if future residual value was a concern im not sure that was the best choice.
I don't have to worry about future residual value with Business Contract Hire. The car, spec and price work out for me, so it's just a case of enjoying the car and handing it back after 3 years without thinking about how much it's worth. raspy said:
barryrs said:
The iX is quite an acquired taste, so if future residual value was a concern im not sure that was the best choice.
I don't have to worry about future residual value with Business Contract Hire. The car, spec and price work out for me, so it's just a case of enjoying the car and handing it back after 3 years without thinking about how much it's worth. How much of the £120k price is options ?
When calculating GFV it is not always a flat calculation on the total price.
There is a calculation on the base price, likely value in 4 years time and then GFV might be 85% of this predicated future value (to leave a bit of contingency for the lender).
Whereas options can be hammered down to near zero value over the term of the PCP deal.
I sold my Taycan to trade, one year old 20k+ miles for 96% of current list price (inc options)
When calculating GFV it is not always a flat calculation on the total price.
There is a calculation on the base price, likely value in 4 years time and then GFV might be 85% of this predicated future value (to leave a bit of contingency for the lender).
Whereas options can be hammered down to near zero value over the term of the PCP deal.
I sold my Taycan to trade, one year old 20k+ miles for 96% of current list price (inc options)
Wilmslowboy said:
How much of the £120k price is options ?
When calculating GFV it is not always a flat calculation on the total price.
There is a calculation on the base price, likely value in 4 years time and then GFV might be 85% of this predicated future value (to leave a bit of contingency for the lender).
Whereas options can be hammered down to near zero value over the term of the PCP deal.
I sold my Taycan to trade, one year old 20k+ miles for 96% of current list price (inc options)
Yes, it had a long list of options. I hear what you are saying, but regarding your own sale, that's based upon demand and supply NOW, and mirrors what I've heard from others that used Taycans hardly depreciate right NOW, but in 4 years time, we don't know whether demand:supply imbalance that currently exists will be exactly the same, and as a result, I can understand why Porsche and others are putting rather low guaranteed minimum future values in their PCPs. When calculating GFV it is not always a flat calculation on the total price.
There is a calculation on the base price, likely value in 4 years time and then GFV might be 85% of this predicated future value (to leave a bit of contingency for the lender).
Whereas options can be hammered down to near zero value over the term of the PCP deal.
I sold my Taycan to trade, one year old 20k+ miles for 96% of current list price (inc options)
kambites said:
Of course there's also an element of manufacturers charging whatever they think the market will bear. Right now they can lease as many cars as they can produce, so why take even a small risk with the GFV?
There’s probably also an element of limiting who can buy.them - they don’t want to make them so cheap that any Tom, Dick or Karen thinks they should have one.Gassing Station | EV and Alternative Fuels | Top of Page | What's New | My Stuff