# Second-Hand EVs Hold Value Better Than Industry Estimates, Study Finds
Transport and Environment, a Brussels-based policy organization, released analysis showing used electric vehicles depreciate more slowly than leasing companies and automakers have estimated. The finding exposes a systematic undervaluation of EV resale prices that inflates lease payments and purchase costs for consumers.
Leasing companies calculate monthly payments based on projected residual values, the price a vehicle will fetch at lease end. When these projections assume steeper depreciation than actually occurs, monthly payments climb higher than justified. T&E's research indicates the EV leasing market has priced in overly pessimistic resale assumptions, likely rooted in outdated data from when battery technology was less proven and market demand for used EVs remained uncertain.
The problem cascades through the market. Automakers use leasing revenue to subsidize new EV sticker prices. When lease residual values are underestimated, manufacturers compensate by raising new vehicle prices or reducing customer incentives. Governments that offer EV purchase rebates based on vehicle list prices effectively subsidize higher prices when leasing underestimates resale value. Buyers choosing to finance rather than lease end up paying inflated prices based on the same flawed depreciation assumptions.
T&E analyzed used EV pricing data across European markets where leasing comprises a substantial portion of new EV sales. The organization compared predicted residual values from major leasing companies against actual transaction prices for two, three, and four-year-old electric vehicles. Across models examined, actual resale prices exceeded leasing company projections by a measurable margin, particularly for vehicles from established manufacturers with proven battery longevity.
Several factors explain why depreciation rates are lower than historical estimates assumed. Battery technology improvements mean newer used EVs retain superior driving range compared to older models, reducing the performance gap between used and new vehicles. Supply constraints on new EVs have tightened used inventory, supporting prices. Consumer confidence in EV reliability has increased as early-adopter issues became known and addressed. Charging infrastructure expansion makes older EVs more practical, broadening the buyer pool.
The implications reach beyond individual transactions. If leasing companies adjust residual value assumptions upward, monthly payments should decline. Lower lease costs make EVs more competitive against internal combustion vehicles on monthly payment comparisons, accelerating consumer adoption. Reduced lease payments also lower the per-kilometer cost advantage needed to justify EV adoption for fleet operators who collectively purchase tens of thousands of vehicles annually.
Governments face a choice. They can adjust EV incentive programs to account for accurate resale values, potentially redirecting savings toward other climate goals. Or they can maintain current incentive levels, knowing that overestimated depreciation artificially inflates the cost-benefit calculation favoring EV purchases. Either approach acknowledges that current market pricing contains systematic distortion.
T&E calls for leasing companies, automakers, and financial institutions to audit residual value assumptions against recent transaction data. Regulators in Europe and beyond should require transparency in how depreciation rates are calculated and what data informs them. Buyers shopping for EVs should demand lease quotes based on documented used vehicle prices rather than industry assumptions.
Accurate resale value data removes a barrier to EV adoption that persists not because of vehicle performance but because of pricing that fails to reflect actual market conditions.