Depreciation on Electric Vehicles: 2025 Trends, Data & Real Insights

Depreciation on electric vehicles (EVs) refers to the rate at which an EV loses its value over time, typically measured from its initial purchase price to its resale or market value after a few years. In 2025, understanding how EVs depreciate is crucial for Indian buyers, insurers, and fleet operators alike—as battery technology, government policies, and market demand rapidly evolve. With updated statistics from IRDAI, NITI Aayog, and industry research, this article dives deep into what drives EV depreciation, how it compares with petrol/diesel vehicles, and what you can expect in terms of costs and benefits.

What Is Depreciation on Electric Vehicles?

Depreciation is the decline in a vehicle’s value as it ages. For electric vehicles, this process is influenced not only by typical factors—like mileage and wear—but also by battery health, charging infrastructure growth, policy incentives, and evolving technology.

• Depreciation Rate: The percentage of value lost each year.
• Residual Value: The estimated resale value after a specific period (commonly 3 or 5 years).
• Factors Unique to EVs: Battery degradation, incentive phase-outs, software updates.

Why Does Depreciation Matter for EV Owners in 2025?

• Affects Resale Value: Determines how much you recover when selling your car.
• Impacts Insurance Premiums: Insurers use depreciation rates to set premiums and claim settlements.
• Influences Total Cost of Ownership (TCO): Faster depreciation can offset savings from lower running costs.

Key Trends in Electric Vehicle Depreciation (India 2024–2025)

How Do EVs Depreciate Compared to Petrol/Diesel Cars?

According to a 2024 Statista report and IRDAI data:

Source: NITI Aayog & Statista India Automotive Insights Q1–2024

What Are the Latest Market Adoption Rates?

India’s EV market is expanding rapidly:

• EV penetration in new car sales (2024): ~7.9%, up from just 2.2% in 2021 (RBI/Ministry of Heavy Industries)
• Projected CAGR for EV sales till 2030: ~44% (NITI Aayog & Rocky Mountain Institute)
• Used EV market growth (CAGR): 31% (2022–25)

What Factors Influence Depreciation on Electric Vehicles the Most?

Is Battery Health Still the Biggest Concern?

Yes—battery health remains the single largest factor affecting EV resale values.

Key Influencers:

1. Battery Degradation

   • Average lithium-ion battery loses ~2–3% capacity per year.
   • A battery at <80% capacity often triggers significant resale discounts.
   • Replacement costs dropped by ~18% since 2021 but still average ₹1.2 lakh for popular models (Autocar India Survey 2024).

2. Software Updates/Tech Obsolescence

   • Frequent OTA software upgrades can extend value.
   • Outdated tech or lack of connectivity features lowers appeal.

3. Charging Infrastructure

   • Cities with robust charging networks see higher residual values for used EVs—by up to 7–10 percentage points according to Cars24 Used Car Index Q4–2024.

Other Factors:

• Brand reputation
• Government incentives phase-out
• Model discontinuations

How Does Insurance Impact Depreciation for Electric Vehicles?

Are Insurers Treating EVs Differently in India Now?

Absolutely! As per the IRDAI Annual Report FY23–24:

Source: IRDAI Report FY23–24; segmental analysis

Key Points:

• Higher claim settlement ratios indicate growing insurer comfort with EV risks.
• Some insurers offer lower premiums due to fewer moving parts and lower accident severity.
• However, depreciation rates are more closely linked with battery warranty terms and model-specific track records.

Pros & Cons: Depreciation on Electric Vehicles vs ICE Vehicles

What Are the Advantages of Slower EV Depreciation?

Pros:

• Lower annual depreciation rates—especially for mainstream models.
• Longer-lasting mechanical components lead to fewer breakdown claims.
• Tech-savvy buyers willing to pay extra for well-maintained batteries/software support.

Cons:

• Rapid advances can make older models feel obsolete faster than ICE counterparts.
• Uncertainty about long-term battery replacement costs affects residual values.
• Incentive withdrawal or changes in GST may impact future pricing structures.

Real Case Examples & Industry Benchmarks

How Does Actual Resale Value Compare in India?

A leading Mumbai-based taxi fleet operator shared their experience with compact electric hatchbacks purchased between late 2019 and early 2020:

Case Study Highlights

• Purchased Price per unit: ₹11 lakh
• After three years of operation (~65,000 km):
  • Average resale offer received in open market: ₹7 lakh
  • Net depreciation over three years: ~36%

For comparison, similar ICE vehicles had depreciated by nearly 43–46% over the same period.

Industry Benchmark Table

Source: Fleet Operator Data; Autocar Professional May–June 2024

Future Outlook: Will Depreciation Slow Down Further by 2030?

Which Trends Will Impact Future Values Most?

1. Battery Technology Improvements

   • Projected cost per kWh expected below $90 by late 2025 (Statista).
   • Better warranties—up to 8 years/160,000 km—boost buyer confidence.

2. Growing Used EV Marketplaces

   • Platforms like Cars24 & Spinny actively certify used batteries.
   • Transparent diagnostics mean less “range anxiety” for second-hand buyers.

3. Policy Support Remains Crucial

   • FAME II subsidies likely extended till at least mid-decade.
   • State-level waivers on registration/RTO fees continue driving adoption.

4. Changing Consumer Preferences

   • Younger urban buyers show higher willingness to buy pre-owned EVs if full service history is available.
   • According to a June 2024 Nielsen survey, *73% of Gen Z urban respondents consider used EVs “highly attractive” if battery health >85%.

FAQs About Depreciation on Electric Vehicles

Why Do Some Models Hold Their Value Better Than Others?

Models with stronger brand reputations or those that receive frequent software updates tend to depreciate slower than lesser-known brands or discontinued variants.

Can Extended Battery Warranties Reduce Depreciation Risk?

Yes—longer warranties provide peace of mind for both original owners and secondary buyers, helping maintain higher resale values across ownership cycles.

How Does Location Affect Resale Value of an Electric Vehicle?

Metros with dense charging networks like Bengaluru/Mumbai see higher used-EV prices compared to tier II/III towns where charging access remains limited.

Two Essential Data Tables

Table A: Top-Selling Used Electric Cars – Resale Percentage vs ICE Counterparts (India Q1–Q2 FY25)

Source: Cars24 Used Car Index; SIAM Analytics June–July ’24

Table B: Year-on-Year Growth in Used EV Transactions vs ICE Cars

Source: OLX Autos Mobility Survey; SIAM/Statista India Automotive Dashboard

Quick Recap – Key Stats & Takeaways on Depreciation for Indian Buyers

• Average annual depreciation for electric cars now as low as 13%, versus ~15–18% for petrol/diesel counterparts (NITI Aayog/Statista).
• Battery condition remains the #1 driver of residual value; warranties up to 8 years/160k km are now standard among leading brands.
• Insurance claim settlement ratios for EVs reached as high as 96.2% among top private insurers (IRDAI FY23–24 report).
• Used-EV sales are growing rapidly at a CAGR of 31%, outpacing ICE cars every year since FY22 (SIAM/OLX Autos).
• Cities with robust charging infrastructure see up to 10 percentage points higher resale values, highlighting location importance (Cars24 Index Q2 ’24).

People Also Ask – Common Questions About Electric Vehicle Depreciation

Q1: Do electric vehicles depreciate faster than petrol/diesel cars?

No—in India as of mid-2025, top-selling electric vehicles typically depreciate slower than most petrol/diesel cars due to lower running costs and rising demand in urban areas.

Q2: How does battery warranty affect my car’s resale value?

A longer remaining battery warranty directly boosts your vehicle’s residual value because it reassures buyers about future repair/replacement costs.

Q3: Will government incentives reduce my effective depreciation rate?

Yes—subsidies such as FAME II lower your upfront cost so even if resale prices drop marginally, your real-world depreciation becomes less severe compared to non-subsidised purchases.

Q4: Can regular software updates help maintain my electric vehicle’s value?

Absolutely! OTA updates that add features or improve performance keep your vehicle relevant longer, slowing down tech-related obsolescence.

Q5: Which cities have the best resale markets for used electric vehicles?

Bengaluru, Mumbai, Hyderabad and Delhi NCR currently lead due to better charging infrastructure and consumer awareness around pre-owned EVs (Cars24/SIAM ’24 studies).

Q6: Is insurance cheaper or more expensive for electric cars given their depreciation?

Many insurers now offer competitive premiums or special packages tailored for electric vehicles owing to fewer mechanical failures—and some even factor slower depreciation into premium calculations (IRDAI data FY23–24).

Ready To Make a Smart Move With Your Next Car Purchase?

The Indian electric vehicle landscape is changing fast—and data shows that depreciation on electric vehicles is becoming less daunting every year thanks to better batteries, insurer confidence and robust used-EV marketplaces. Whether you’re buying new or considering a certified pre-owned model, always compare warranty coverage, check battery health reports and consult insurers who understand the unique dynamics of this sector.

To make an informed choice:

1. Compare multiple models’ historical depreciation using trusted auto portals.
2. Review latest insurer CSRs and premium trends from IRDAI reports.
3. Visit certified used-EV dealers who provide transparent diagnostics before purchase.

Have questions or need personalised advice? Reach out via comments—or contact your local dealership today!