We are often asked how the residual value of electric vehicles is calculated. We would like to share some of our findings.
The subject is incredibly complex, but we will try to simplify it.
How is the residual value made up and why is it particularly difficult to predict it precisely now?
The process of determining the residual value is still new for electric vehicles and is therefore rated as relatively unstable, since, in contrast to conventionally operated vehicles, there is no historical data to refer to. However, when you determine certain key factors and keep these constantly up to date, the process becomes easier to assess.
INSTADRIVE now operates a fleet of around 1000 fully battery-operated vehicles in Germany and Austria. Our customers ease our vehicles for a period of 3-6 years and here we assume the full residual value risk. Easen stands for easy and leasing. The customer doesn‘t have to worry and simply returns the vehicle after the term.
Our team has been dealing with electromobility for many years, which has enabled us to gather a large amount of experience regarding the development of residual values and incorporate them into our calculations. Even well-known platforms such as Eurotax and Schwacke, have already “peeked” at INSTADRIVE 😉
INSTADRIVE has been on the market for 4 years and our own empirical data is constantly being incorporated into the calculation of the residual values. Here we would like to give you an insight into which factors influence the residual value of an electric car.
The following aspects influence vehicle residual values and are included in the calculations at INSTADRIVE:
Market saturation of the vehicle model
How many vehicles in this model are or have been purchased in each country?
Is the demand falling?
Discount level of the model
What is the manufacturer’s discount?
How high are the grants?
If a brand always gives a 20% discount, then this is also the actual “list price”.
When it comes to funding, it depends on the amount of funding and how long it is granted. Will the list price then be raised again to the original level or will other discounts follow?
Execution quality/Processing quality of the vehicle model
Is the vehicle well-made or are there many problems and complaints?
Are high quality materials used?
Aspects such as the gap dimensions, rust protection or the seals should be considered here.
Brand value / Brand recognition value
How is the brand perceived by the population?
Does the brand bring a certain status with it?
Range compared to competitor vehicles in the same category.
How long is the range of the vehicle and how long is it compared to similar models from other manufacturers?
How high is the power consumption per kilometre driven?
Price compared to competitor vehicles in the same category.
How is the vehicle priced in comparison to similar models from other manufacturers?
Here the prices must be index-adjusted. If, for example, a manufacturer installs a heat pump as standard, then the costs for this have to be added to other models, where this can only be selected as additional equipment.
Model Facelift/Battery upgrade frequency
At what interval is the vehicle renewed? The more often, the worse. There is always a devaluation of the “old” model.
Fast charge capability
Today this is an absolute must and vehicles without the ability to quickly charge are almost impossible to sell.
Fast charging standard (CHAdeMO or CCS)
The fast-charging standard CCS is more widespread in Europe and is usually found at charging stations. CHAdeMO is an expiring standard and will no longer be supported in a few years. This means that vehicles like the Nissan Leaf lose their suitability for long journeys and are automatically cancelled.
In addition, the shape of the charging curve is very important for DC charging. A long, flat curve with high charging capacities leads to better value stability in the future. It is also relevant how long a vehicle can hold the high loading level. The Audi e-tron 55 quattro, for example, is extremely strong here.
AC charging capacity: 3-phase
Vehicles like the first-generation Mercedes EQC and the first-generation Jaguar i-Pace are sure to run into problems here. Especially with large batteries, the charging times are extremely long.
What strength/image does the group have in a country? For example, the VW group or BMW and Mercedes enjoy a large market presence in Germany and Austria and have a strong image. At the same time, there are high market shares in the Update-over-the-air capability.
E.g. Tesla offers software updates without having to drive to the workshop
App? Does it have its own app. What can the customer do with this?
Repair costs / Spare parts costs.
How high are the costs for repairs and spare parts?
What about combustion engines?
Since politicians are taking increasingly serious measures to reduce combustion engines, INSTADRIVE assumes that newly registered combustion engines will develop very poorly in terms of their residual value, as more and more people are relying on e-mobility.
Large automobile manufacturers are already giving high discounts on combustion engines, as they want to continue to utilize production, which will mean that the value of the used vehicles will collapse, and the market will be more and more inundated by combustion engines.
The residual values of e-cars have so far been relatively stable, but there have been strong “outliers” in the past, with buyers losing a lot of money. A good example of this is the price reduction on the Tesla Model S.
If you take a closer look at vehicles such as the VW e-Golf compared to a VW Golf 7:
E-Golf, 116PS: Bj. 2016, approx. 40,000 km, NP: around 43,000 euros, still costs around 17,500 euros today, depreciation: 56%
E-Golf, 136PS, manufactured in 2018, approx. 40,000 km, NP: around 43,000 euros, costs 22,000 euros today, depreciation: 45%
Golf 7 1.4 TSI, 125 PS, model year 2016, approx. 40,000 km, NP: 32,000 euros, still costs 14,000 euros today, depreciation: 56%
Golf 7 1.4 TSI, 125 PS, model year 2018, approx. 40,000 km, NP: 32,000 euros, still costs 16,500 euros today, depreciation: 48%
In the case of fully battery-operated vehicles, the retention of the residual value depends heavily on further development. If, for example, battery capacities and the associated higher ranges were to increase rapidly, the residual value of e-vehicles would collapse massively.
That is why INSTADRIVE offers the residual value risk-free EASING, with which you pay a fixed monthly rate and do not have to worry about the residual value of the vehicle after the end of the contract.
After the end of the contract, you have 3 options:
You continue to drive your vehicle: A new contract is drawn up for this.
You switch to another vehicle: You return your vehicle and either order a new vehicle or take one of our used vehicles. This also requires the conclusion of a new contract.
You return your vehicle: the contract ends as originally agreed.
INSTADRIVE is a service company that provides its customers with a carefree package for purchasing electric cars. In addition to cross-brand advice, this also includes financing, insurance, maintenance, the annual review MOT, and funding processing, as well as the motorway vignette in Austria. All these benefits are covered by one low monthly rate. This ensures that customers do not have to worry about the sale and the difficult-to-estimate residual value of the vehicle. The advice is provided by Specialists who have many years of experience in the field of electromobility. One focus is on customer support before and during the entire contract period. In this way, INSTADRIVE creates security for customers for a risk-free entry into electromobility and supports the necessary shift towards more environmentally friendly mobility.
Here is the link to our online configurator.