EV Depreciation in Australia: Which Electric Cars Hold Their Value?

EV depreciation in Australia has been the worst-kept secret of the electric transition. Electric cars lost around 25 per cent of their value in their first year against 11.5 per cent for petrol cars, according to AADA and AutoGrab market data reported in 2025, and two-year-old Teslas have been selling for barely half their original price.

That is the headline. The full picture in mid-2026 is more interesting: used EV values have been stabilising since January, used battery EV sales jumped 54.6 per cent in the first half of 2026 (AADA), and Tesla was rattled enough to launch a guaranteed future value program in July 2026. The depreciation story is turning, and whether that is good or bad news depends on whether you are buying, selling or signing a lease.

Here is what the data actually says, why it happened, and how to keep the depreciation risk on the right side of the ledger.

How Bad Has EV Depreciation in Australia Been?

Steep, and steepest exactly where sales were highest. AutoGrab’s 2024 Automotive Insight Report put average EV retained value at 60.3 per cent after three years, while hybrids retained 92.4 per cent. Petrol and diesel utes and SUVs sat comfortably in between.

The model-level numbers from Pickles and Datium Insights (September 2025) show the spread:

Model (2-year-old)	Retained value	Typical used price
BYD Seal	78%	~$47,000
Tesla Model Y	58%	$40,332
Tesla Model 3	54%	$35,284
BYD Atto 3	54%	~$27,000
MG4	50%	$23,195
Toyota LandCruiser (comparison)	88%	n/a
Toyota HiLux (comparison)	85%	n/a

A Toyota RAV4 retained 88 per cent over the same window. No EV came close.

Tracking listings tells the same story over a longer arc. CarsGuide research reported by EV Central found the average used Tesla Model 3 listing fell from $65,990 in January 2023 to $46,705 by December 2024. Model Y listings dropped from $79,950 to $53,987 over the same two years, a 36 per cent slide.

Why EV Values Fell So Hard

New-car price cuts did most of the damage, not battery fears. When Tesla cut Model Y and Model 3 prices repeatedly through 2023 and 2024, every used Tesla in the country was repriced overnight. Nobody pays $60,000 for a two-year-old car when the new one costs $58,900. BYD and MG ran the same playbook, and their used values followed the same slope.

Three other forces piled on:

Rapid model improvement. Each new generation brought more range and faster charging at the same or lower price. The refreshed Model Y launched in 2025 with a Long Range variant roughly $13,000 cheaper than the original 2023 car, which made early cars look expensive twice over.

A wave of cheaper Chinese entrants. Every sub-$45,000 newcomer resets what buyers expect for their money, and 2025-26 delivered a stream of them. This pressures used stock hardest because used buyers are the most price-sensitive.

A thin used market. Battery EVs made up only about 1.1 per cent of used sales in 2025 (AADA). Small markets are volatile markets, and range anxiety among second-hand buyers, noted by Pickles’ automotive team in 2025, kept demand shallow while supply from ex-lease and fleet returns grew.

Notice what is missing from that list: actual battery failure. Geotab’s 2024 study of thousands of EVs measured average degradation at just 1.8 per cent per year, and Tesla’s 2023 Impact Report shows Model 3 and Model Y packs retaining about 85 per cent of capacity after 320,000 km. The market priced in a fear the engineering data does not support.

The 2026 Turnaround

The used EV market flipped from buyer’s market to seller’s market inside six months. March 2026 was the pivot: used EV sales jumped 138 per cent month-on-month to 7,557 units as petrol prices spiked toward $2.50 a litre, while listings fell 38 per cent (AADA, April 2026). AADA chief executive James Voortman put it plainly: rising fuel prices are pushing Australians toward used EVs.

Across the first half of 2026, used battery EV sales grew 54.6 per cent and average days-to-sell fell from over 60 in January to under 40 by June (AADA). Retained values have been stabilising since January 2026, with upward pressure since March.

Manufacturers moved to lock the floor in. In July 2026 Tesla partnered with finance company Driva to offer guaranteed future value loans on new Model 3 and Model Y purchases, giving buyers a contracted minimum resale value with the option to hand the car back at the end of the term. A manufacturer guaranteeing resale is the clearest signal yet that the freefall era is ending, and that Tesla knows depreciation was costing it sales.

The industry has also tackled the battery-confidence problem directly. RedBook Inspect, the NRMA (from 2025) and auction house Manheim with its AVILOO partnership all now offer independent battery health certificates in major cities. No government mandate exists, but a used EV with a verified state-of-health report is an easier sell, and that liquidity supports prices.

What This Means If You’re Buying

A two-to-three-year-old EV remains one of the best value plays in the car market, but the window is narrowing. At September 2025 pricing, roughly $35,000 bought a two-year-old Model 3 and $23,000 a two-year-old MG4, each with most of an 8-year, 160,000 km battery warranty remaining (Tesla’s standard cover on the Model 3 and Model Y RWD, with 70 per cent capacity retention guaranteed). With values now stabilising, waiting for further falls looks like a losing bet.

Buying used: pay for a battery health check, compare the price against the heavily discounted new equivalent (the gap is sometimes smaller than you expect), and prefer models whose new price has stopped moving. Our EV total cost of ownership guide covers how depreciation stacks against fuel and servicing savings, and you can browse the current market on our electric vehicles hub.

Buying new: depreciation is a cost you can manage. The FBT exemption on a novated lease offsets a large slice of it, guaranteed future value products transfer the risk to the financier, and buying after a price cut rather than before one is worth thousands.

The Novated Lease Residual Trap

Depreciation risk gets personal when a lease ends. The ATO sets minimum residual values for novated leases under taxation determination TD 93/142: 46.88 per cent of cost after a three-year lease, 37.50 per cent after four years, 28.13 per cent after five.

Those percentages were set for cars that depreciate like petrol cars. Run them against the Pickles data above and the problem is obvious: a Model 3 that retained 54 per cent at two years is cutting it fine against a 46.88 per cent residual at three years, and an MG4 at 50 per cent after two years will likely be underwater. If the market value at lease end is below the residual, the gap is yours to pay.

That does not make leasing a bad idea. The FBT savings are usually larger than the residual risk. It does mean the residual deserves as much attention as the weekly payment. Our novated lease residual value guide works through the maths, and the novated lease calculator lets you model your own numbers.

Frequently Asked Questions

Do electric cars depreciate faster than petrol cars in Australia?

Yes, so far. AADA and AutoGrab data reported in 2025 showed EVs losing around 25 per cent of their value in the first year against 11.5 per cent for petrol cars. The gap narrowed through 2026 as used EV demand surged and values began stabilising.

How much value does a Tesla lose in Australia?

Pickles and Datium Insights data from September 2025 showed two-year-old Model 3s retaining 54 per cent of their original price and Model Ys 58 per cent. Much of that fall came from Tesla cutting new prices, which repriced every used Tesla overnight.

Which EV holds its value best in Australia?

The BYD Seal led the Pickles and Datium September 2025 data with around 78 per cent retained after two years. Fast-depreciating models included the MG4 at 50 per cent. Cars whose new price was never discounted tend to hold used value best.

Is it worth buying a used EV in Australia in 2026?

The value case is strong but the bargain window is narrowing. Used battery EV sales grew 54.6 per cent in the first half of 2026 (AADA), inventory tightened, and prices have stabilised since January. Two-year-old cars still carry most of their eight-year battery warranty.

What happens if my novated lease EV is worth less than the residual?

You are liable for the gap. ATO rules set minimum residuals, such as 28.13 per cent of cost after five years, and if the market value at lease end is lower you pay the difference or refinance it. Factor this risk in before signing, especially on fast-depreciating models.