Lately, several articles have “hammered” EVs claiming they are a poor-investment. While for certain new EVs that is true, the solution is rather simple, be on the happy side of this deal and buy used. But lets dig into this a little further, briefly the “slower-than-expected” sales of EVs has caused depreciation of new EVs that is higher expected. Particularly as in the fall of 2024 we find ourselves in a high interest rate and cheap gas environment. Same has arguably happened for internal combustion engine (ICE) cars.
Cheap gas (source), and high interest rates are a potent wind blowing against EV adoption these days. Even so, sales are growing (source), perhaps slower than automakers like, but growing nevertheless. Generally EVs tend to be more expensive to acquire, but less expensive to run. High gas prices tend to grow that gap. lease payments vs interest rates graph below illuminates that low interest rates do lower your monthly payments, here we assumed a 20k loan, something that might in effect be a 2 year lease on a 40k vehicle.
So, in a cheap-gas, high interest rate environment such as the one we find ourselves in the economics of an EV are not as rosy as they are if gas is expensive and interest rates are low. This translates into reduced interest in EVs, new and used. Which translates into lower prices for new EVs and thus far lower prices for used ones.
Back in 2022, gas was at $2/l, vs $1.5/l now, and Bank of Canada was targeting a 1% interest rate, vs 4% now (source). Granted you need to butter on quite a few percent to go from the overnight rate to an auto-loan rate, but you get the gist, back in 2022 EVs were much more in than they are now, hence prices were high for both new and used EVs.
So, if you bought in 2022, and want to sell in 2024, ouch! That’s one of these buy high sell low things, not good business at all. If you can, the smart thing might be to hold on to your EV for now, as interest rates are expected to fall (source), and given the slowdown in EV manufacturing (source), might mean a better deal next year. Granted if you leased, you may not have as many options as if you bought or financed your EV.
Gas price forecasting for next year (2025 at the time of this writing), forecast either a slight reduction in gas prices (source) or stable prices (source), thus were unlikely to see much movement on that front.
If you are in the market for an EV, now is a great time to buy (source), before interest rates start to fall further, and interest in EVs picks up again, and with it, prices.
Electric car adventures 