The residual value of hybrid and electric vehicles is reportedly dropping precipitously due to falling fuel prices.
According to Kelley Blue Book, a combined residual value for 2016 model-year hybrids and EVs sold in January and February is projected at 29.5 percent after 36 months. That’s down 4.1 percent from a year ago.
“Nobody really knows, but there are few signals to lead us to believe that gas prices will spike up over the next few years,” Eric Ibara, Director of Residual Values at Kelley Blue Book, told Automotive News. “Because of that, we think hybrids are going to continue to struggle and as a result our residual value for that segment is also soft.”
An analyst for NADA Used Car Guides told AN that hybrids and EVs had depreciation rates of between 25 percent and 35 percent in 2015, while vehicles with conventional power trains saw rates of around 16.5 percent.
Sometimes a drop in residual values can be offset, though. Ibara mentioned the Nissan Leaf – he said his data indicated a severe drop before a rebound. He speculated to Automotive News that consumers may have started to see the Leaf as a bargain, which may have led to a round of buying of used Leafs, and that in turn would bounce the residual rate back up.
NADA estimates that over half a million compact cars will come off lease this year, and that will cut into the residual values of hybrids and EVs as well. Another factor impacting the residual value of used cars is that any tax credits go to the first buyer, but not the second.
Still, not all hybrids or EVs will suffer. Ibara actually had optimistic predictions for the Chevrolet Volt due to its redesign for the 2016 model year and its longer range, thanks to a range-extending gasoline motor.