A three-year-old electric vehicle in China now resells for approximately 45% of its original value, down from nearly 55% in 2023, according to the China Automobile Dealers Association. This depreciation trend stems primarily from uncertainty over battery performance and replacement costs.
Valuation Challenges
China has dominated the global electric vehicle market for ten years, with 44 million EVs currently on its roads—the first nation where aging electric fleets are becoming widespread. However, dealers struggle to assign accurate prices to used EVs because no standardized method exists to evaluate the condition of their most costly component: the battery, industry experts say.
This issue extends to countries importing Chinese EVs, which will encounter identical valuation hurdles as those vehicles reach five years old.
Last year, Chinese automakers shipped over 2.5 million electric vehicles abroad, double the previous year’s total, with Europe as the top destination, followed by Southeast Asia. Chinese EVs now account for 55% of electric vehicle sales outside Europe and the United States.
Battery Health Concerns
In Gulf markets, for example, buyer interest in used EVs plummets after the fifth year, coinciding with rising mileage and the expiration of battery warranties, says Harsh Chaturvedi, an independent automotive consultant based in the United Arab Emirates.
Financial institutions, analysts, and leasing companies typically assess vehicle depreciation at three- and five-year intervals, the standard terms for loans and leases. EVs depreciate more steeply in these calculations because new buyers pay premiums for cutting-edge technology and the status symbol they represent, according to Karl Brauer, executive analyst at U.S.-based car search platform iSeeCars.
Battery warranties exacerbate dealer reluctance toward older EVs. Most manufacturers guarantee batteries for eight years or 160,000 kilometers, but replacements can cost a substantial portion of a new car’s price, Chaturvedi notes. As each year passes, warranty coverage erodes, shifting repair costs onto owners once protections expire.
Abhimanyu Girotra, who purchased a Tesla Model Y in Dubai three years ago, has avoided using his car’s built-in battery health diagnostic tool, as any issues would fall under Tesla’s warranty.
While assessing battery health is straightforward, modern EVs can generate reports through diagnostic ports, used car dealers seldom request these evaluations. Pricing instead relies on age, mileage, remaining warranty terms, and brand reputation, none of which reveal the battery’s true state, Chaturvedi states.
China is taking steps to address this gap, with buyers increasingly demanding inspection reports for batteries, motors, and electronics before finalizing used EV purchases, Russo reports. Dealerships are investing in testing equipment to provide more precise valuations.
A January study by fleet telematics firm Geotab, analyzing 22,700 electric vehicles, found that the average EV loses just over 2% of its capacity annually, a rate slow enough to preserve most functionality after a decade. However, vehicles frequently charged at high power degrade at up to 3% per year, double the rate of those charged gradually, while extreme heat accelerates wear, the study found.
This shows the need for better methods to assess battery health in the used market, as current approaches fail to reflect true condition.
When a used EV becomes unsellable, its residual value hinges on scrap metal prices, typically fetching only a few hundred dollars for the lithium-iron-phosphate batteries common in Chinese models, according to Frederick Bloomfield, senior analyst at Benchmark Mineral Intelligence.