Electric vehicles top list of cars and trucks that depreciate the fastest

When it comes to resale value electric vehicles don't hold their charge.
Electric cars lead our list of the cars and trucks that lose their value faster than average.Also ranking poorly are some big-ticket luxury cars and not surprisingly older lame-duck vehicles that are late in their product
life cycle and about to be replaced.
On a list of predicted residual values for 2013 models produced by ALG Inc., the bottom three examples are the battery powered Nissan Leaf the Lincoln MKS, a more upscale, expensive cousin to the Ford Taurus and the Mercedes-Benz CL Class a two-door version of the flagship S Class sedan, which is about to be replaced.All are predicted to retain about 36 percent of their original sticker price after 36 months according to ALG.That makes the Nissan Leaf worth a predicted $10,555 after 36 months.The Lincoln MKS drops to an estimated $15,755. The Mercedes-Benz CL Class is predicted to be worth $41,508 after 36 months.That sounds like a lot but the car will have dropped nearly $74,000 in value in three years according to ALG.The cars that are on the bottom of the list tend to be electric vehicles said Eric Ibara director of residual consulting for Kelley Blue Book Irvine Calif. which has published the Kelly Blue Book Official Residual Value Guide since 1982.Electric vehicles like the battery-powered Nissan Leaf or the Chevy Volt plug-in hybrid have two strikes against them in terms of value retention, he said in a recent phone interview.The first is mathematical.The residual value is an estimate of what the resale value at the end of a lease.Thirty-six month leases are the most common term, so 36-month residual values are the usual auto industry benchmark.An old rule of thumb is that most cars depreciate 40 percent as soon as they're purchased or an average of 55 percent after three years.Residual values are expressed as a percentage of the original sticker price. If the sticker price is high like it is for EVs and for really expensive luxury cars – that makes it tougher percentage-wise.In addition electric vehicles come with a federal tax credit of $7,500. For all intents and purposes that comes straight off the sticker price.However to be consistent with other cars analysts don’t factor in the tax break when calculating residual values.EVs like the Nissan Leaf would perform a lot better in residual values if the tax break were factored in.
Second analysts like Kelly Blue Book and ALG Inc. are skeptical about consumer demand for electric vehicles.The technology is still relatively new. Volumes are limited so the unit cost is high. So-called range anxiety is an issue.The market for used EVs is even more problematic.It may be a little too soon but there seem to be fewer people interested in a used electric vehicle. Sales of new EVs have been more or less disappointing to most manufacturers but the demand for the used EV seems to be weaker Ibara said.Nissan introduced the battery-powered Leaf in the tail end of 2010. Sales were supposed to take off when Nissan shifted production to a U.S. factory late last year and Nissan introduced a less expensive model in March, for the 2013 model year.Nissan Leaf sales have nearly tripled in 2013 to around 18,000 after 10 months, but so far sales are slower than expected.A Nissan spokesman pointed out that used EVs are only just beginning to reach the market in any numbers.Just this month Nissan North America added the Nissan Leaf to its Certified Pre-Owned program, and that should help used car sales. Nissan is seeing a bounceback in used-vehicle prices for the Nissan Leaf in recent months, the company said.ALG Inc. Santa Barbara Calif. which publishes another widely used residual value guide cut residual values for electric vehicles plug-in electric vehicles and hybrids this fall.EVs certainly have a problem on the demand side said Eric Lyman ALG vice president, in a recent phone interview.