MOST HYBRID CARS DEPRECIATE SLOWER THAN ICE-POWERED AND ELECTRIC VEHICLES

Recently, we wrote about how Japan's slow rollout of electric vehicles (EVs) isn't necessarily a bad thing. In fact, they might be just right on time, since in recent months, EV sales have slowed down.

Yes, it's still growing, but EVs are spending far more idle time on dealer lots compared to internal combustion engine-powered vehicles (ICE) and hybrid vehicles. It was also around that time when Toyota's current Chairman and former President Akio Toyoda had his "I told you so moment" because he was right about the part that the world isn't ready to accept EVs just yet, as reflected in recent sales figures.

And that's exactly what's also happening from a resale value perspective as EVs are suffering the most from depreciation based on a recent study by iSeeCars. On the other hand, hybrids are holding on to their values really well, and in fact, for those buying a new one, hybrids also sit on dealer lots much less than other vehicle types. Why are hybrids so popular these days, and why are EVs not as hyped up as automakers anticipated? Here's all you need to know.

Related: 10 Hybrid Cars That Are Also Surprisingly Powerful

Hybrids Are More Desirable Than EVs To Most

It's easy to see why hybrids are more appealing to most than EVs. The world is crazy erratic. At one point, average national gas prices hit $4 per gallon, and a year later, as dust from Russia's invasion of Ukraine has settled, things are back to normal--sort of. Fears about those high gas prices continue to linger, which is why many consumers see hybrids as an attractive option to jump onto the electrification bandwagon

Think Of EVs As Smartphones With Wheels

To determine why the resale values of EVs aren't great, we have to understand their life cycle. Think of EVs as if they were smartphones, mostly due to their massive batteries. Battery degradation is real, and though battery technology has improved over the past decade, these things still don't last forever.

Additionally, the world is still transitioning towards EVs. Therefore, just like the smartphone revolution in the mid-2000s, EV technology is still in its infancy and is still seen to rapidly improve in the coming years and decades.

As a result, an EV from 2016 will be far different from an EV in 2023, not just in terms of features and tech, but more so with the drivetrain and battery. So yes, your Ioniq 5's battery right now might be great, but once solid-state batteries are released, then your entire EV has turned obsolete. That's not the case with ICE cars, whose powertrains have already matured at this point and therefore won't be drastically different even a decade from now.

Hybrids Combine The Best Of Both Worlds

On the other hand, hybrids are appealing because they essentially combine the benefits of ICEs and EVs. You basically have zero range anxiety, and at the same time, you also have the smoothness of an EV at city speeds. When you step up to a plug-in hybrid, you can even treat that vehicle as an EV at short distances when fully charged and as an ICE car when you want to travel long distances.

Related: Why Your Next Car Should Be A Hybrid

Here's How Hybrids Are Holding Up Versus EVs

Just how well are hybrids holding up against EVs and even ICE cars in terms of resale? Well, better than all of them on average, actually based on the same iSeeCars study. The industry average depreciation rate over a five-year period is 38.8 percent, while hybrids, on the other hand, fare better than the industry average at 37.4 percent.

EVs, on the other hand, lose as much as 49.1 percent of their value over five years. Now, when bundling together body styles, the picture changes somewhat. SUVs in general lose about 41.2 percent of their value, while trucks fare better at 34.8 percent.

How Every Category Fares

(Data sourced from iSeeCars)

Unsurprisingly, The List Is Dominated By Toyota

Now that we know hybrids hold their value really well, which among these hybrids is the best? Unsurprisingly, the list is dominated by a plethora of Toyotas, since Toyota has been a pioneer of hybrids as well offering the most hybrid models in the United States. Again, from the same iSeeCars study, here's how each model fares against each other as well as versus the industry average.

Hybrids: Average Five-Year Depreciation

(Data sourced from iSeeCars)

Here Are The EVs With The Best Resale

Now, as for the EV with the best resale value, that would be the Tesla Model 3. However, compared to the hybrid's average depreciation of 37.4 percent, the Model 3's is still lower at 42.9 percent. It is still higher than the EV average of 49.1 percent, so you can only imagine the depreciation of the other EV models, which is more than half its MSRP over a five-year period. Using the same iSeeCars study, here's a chart of each EV model and their respective depreciation after five years.

EVs: Average Five-Year Depreciation

(Data sourced from iSeeCars)

Related: 10 Hybrid Cars That Will Make You Rethink Efficiency

Hybrid Resale Values Reflect Their Desirability

Hybrids are proving to be desirable in the used car market based on these strong resale values. What does this mean if you plan to own a hybrid or an EV? Let's break it down, shall we?

Sure, Go Ahead And Buy Your Dream Hybrid

Because hybrids hold their values really well, and the ICE that's mated to the batteries and electric motor has matured at this point, there are barely any pros and cons to whether you want to own a hybrid or lease one for the short-to-mid-term. Whatever innovations made to EVs do carry over to hybrids, but not as radically as one would expect. Therefore, a hybrid in 2023 will still be similar to a hybrid in 2033, which is why even owning one long-term won't be a problem.

With An EV, Consider Leasing Instead Of Owning

However, if you want to own an EV, the best financial solution is to lease one. That's because, as mentioned, the rate of innovation in an EV is very fast, and an EV in 2023 will be drastically different from an EV in 2033. That's especially true as all automakers, including Toyota, are pursuing the development of solid-state batteries. That alone will be enough to render today's lithium-ion battery-powered EVs obsolete and undesirable by then.

By leasing an EV, you're less susceptible to the massive depreciation they experience. In addition, you won't have the obligation to replace that massively expensive battery at some point in an EV's life when leasing one, as opposed to owning it in the long term. In the end, whether you lease or own a vehicle is very dependent on your lifestyle and financial situation. If you can afford to buy an EV in cash and own it long term, then by all means go ahead, but for those who want the most value out of their hard-earned cash, then a hybrid is still probably the best financial option in 2023.

2023-11-18T21:04:55Z dg43tfdfdgfd