By on August 31, 2010

With the Mitsubishi i-miev electric car about to hit the British market, the BBC decided to break down the Pounds and tuppence behind the EV hype. And though it found that the i-miev comes out looking quite well thanks to Britain’s EV consumer subsidy, its freedom from congestion charges and road tax, fuel price differences and estimated servicing costs, it has one eye-popping cost associated with it: nearly 50 percent depreciation over the first three years. And that’s what Mitsubishi is willing to cop to. So not only will your new i-miev cost about twice as much as a little Fiat 500, it will lose about enough value after three years to have paid for that same Cinquecento. Needless to say, as American consumers begin their own first flirtations with the electric automobile, we will continue to keep a close eye on this issue.

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22 Comments on “EVs Are Great, Just Don’t Buy The Battery Part Two: 50 Percent Depreciation In Three Years...”

  • avatar

    If the UK government doesn’t spend other people’s money then it’s not financially viable? And what if you don’t pay the congestion charge because you don’t live in London? Will all UK residents face a congestion charge so the non-tax can be bestowed upon the green drivers? I guess clean air is worth it, as long as there is no pollution generated in making the car in the first place.

    How about just giving them away and having tax payers who drive gasoline cars foot the entire bill?

  • avatar

    The depreciation here was for both vehicles simply calculated as 49% of the purchase price.

  • avatar

    Where do they get that 50% depreciation figure? Did somebody just make it up? Or do they have a working crystal ball?

    UPDATE: Robbie answered my question before I asked it. Given that they just assume 49% depreciation, the whole accounting should be taken with a grain of salt.

  • avatar

    According to these figures, BOTH cars depreciate a little OVER 50 percent in three years.

    Not uncommon among non-EVs.

    • 0 avatar

      Sounds about right, MK…I have long used the “35% residual value after 5 years” equation, which holds pretty true across the board. A really good car, like Honda or Mini, might be 40-45%, while a GM vehicle during the old 0% financing days would be more like 25%.

      Half value after 3 years surprises a lot of people, for some reason. That’s the magic number that makes places like Carmax so successful. People walk in and pay 25% less for a 3-year-old car (“because it looks like new!”) and the dealer gets a nice little margin out of it.

    • 0 avatar

      Michael and Ash,

      Also, they are talking about the UK. As I understand it due to various cultural, tax, and regulatory reasons depreciation can be much steeper than in the US.

      For example the British tax code highly favors the provision of company cars to employees. A person in the US might drive a Accord because he has to pay for it himself, while in the UK that person might drive a new 3-series every 3 years as a perk. However, that means the supply of used 3 year old 3-series is higher than demand on the used market driving down prices.

    • 0 avatar
      Robert Schwartz

      49% after 3 years is 21% annual depreciation. I think that is pretty close to average.

      35% after 5 years is 19%. Also close to average.

  • avatar

    Also, why the comparison between a 10k car and a 28k car?

    Comparing a 500 and a i-miev is like comparing a Lotus Elise and Yaris since they are both small coupes. They may kinda meet the same criteria but they’re not the same at all.

    • 0 avatar

      That’s the EV price premium, and they were Mitsubishi’s numbers – not Fiat’s. There are no 10k EVs.

      To modify your illustration, Mitusbishi’s exercise is like comparing a $10k gas Yaris to a $28k EV Yaris, and they’re trying to make their EV look better than a ‘comparable’ gas car.

    • 0 avatar
      Robert Schwartz

      Functionally, the 500 and the i-mev are quite comparable. They are both Class A (City or Kei) cars. The Yaris is a sub-compact sedan the Lotus Elise is a sports car. If you are trying to figure out the utility of an electric car, then you should compare it to a similar gas powered car. The Tesla should be compared to the Elise, as they are both built on the same platform.

  • avatar

    That’s the EV price premium

    So, then you’d call the price gap between a Yaris and a Elise the “performance price premium?” If it’s ok for a performance geek to pay extra for an Elise why is it wrong for a tech geek to pay extra for an EV?

    Again – you use the term “EV price premium” is it any different than the “v-6 price premium” or the “v-8 price premium” or the “turbo price premium”?

    If someone spent 100k on a Corvette ZR1 would you say they got a bad deal vs. spending 12k on an Aveo? Would you lament the 88k “supercharger price premium” or the “v-8 price premuim” vs. the Aveo?

    • 0 avatar

      I agree with all your terminology.  Paying the $88k “supercharger price premium” to get a ZR1 instead of an Aveo is worth it if you’re seeking a performance car.
      You can buy an EV if you love technology more than money.  But one reason to buy an EV is for economy, and so the “EV price premium” is very relevant.

  • avatar

    The Yaris is a sub-compact sedan the Lotus Elise is a sports car.

    I thought they were both 2-door, 4-cyl, coupes? Now, in your mind you might think that the sporty nature of the Elise makes it vastly different than a Yaris, and I’d agree. But, by the same token, the technology in an EV makes it as different from a ICE car as a Elise is from a Yaris.

    • 0 avatar

      They aren’t comparing technology or nature of the vehicle or anything like that, they’re comparing two similarly-sized cars being used in the same environment for the same purpose.

  • avatar

    Would you buy an Elise to go to the grocery store? And would you buy a Yaris to take to trackdays? And no, even the boys at ye olde Sport Compact Car couldn’t wring blood out of that stone…

    The Yaris and Elise are two completely different vehicles that serve different purposes. The iMIEV and Fiat 500 are around the same size, drive the same, and have similar performance. The only difference is the engine. And no, a diesel Yaris isn’t as far removed from a gasoline Yaris as an Elise, which is the connection you’re trying to make. They just have different engines.

    The whole point of cars like the iMIEV is that they’re meant to replace gasoline cars like the Fiat 500. They’ll be bought by the same people, and will be used to do the same thing. The selling point being the electric car should be more convenient to use, less polluting and cheaper to run. Which it is… if you get a 5,000 GBP subsidy.

  • avatar

    “Why pay the “turkey premium” when a canned ham will do? Are they not similar meats eaten for the same reason??”

    Is that to me or Rob?

    I think it’s great if people want to pay extra for something they enjoy. If you enjoy tech go for tech, if you like comfort or luxury or performance go with that. Robert seems like the one who objects to people wanting to pay more for things he doesn’t value.

    • 0 avatar

      That was to you, but I misread your post. A thousand sorries.

      I do agree with you. Nothing wrong with paying for what you like, whether it’s an electric drivetrain or a canned ham.

  • avatar

    There’s nothing wrong with buying something for a purpose it’s not designed for… which is why my aunt, a school secretary, drives a Viper to school.

    BUT: You market a car to the general public, you market it on its strengths. Porsche 911s and Dodge Vipers are marketed as sports cars, and advertising touts their track performance and performance numbers. Advertising imagery shows them going fast. These cars are marketed based on those attributes… though we all know they’ll end up taking owner to the coffee shop on those one or two sunny days out of each year when traffic isn’t choked to a standstill. Yes, it’s terribly wasteful, but our entire way of life is wasteful, so it’s a bit hypocritical to cite one thing as being better than another unless you wear a hair shirt and eat berries in the sticks.

    Mitsubishi is marketing the iMIEV here as a people mover. A small car for commuters. And it’s on those strengths it’ll be judged. The only added “performance” of the iMIEV over a traditional ICE car is the ability to cool down the cabin on a hot day without choking you with monoxide fumes… and the low cost of operation.

    Sure, there’s nothing preventing people from paying a huge premium for *perceived* value (much like they do for BMWs or MBs, much to my puzzlement… because I do like canned ham), but again, this is much like deciding between a gasoline Yaris and a diesel Yaris… or an EV Yaris (there are shops that do the conversion)… not like deciding between a Yaris and an Elise. The extra value is in the economy and environmental benefits… which are closely intertwined… because the less you pay per kilometer… the less you are polluting.

    Of course… it’s kind of peculiar that it takes 10,000 GBP to make it worth it… (money which can go to environmental incentives that benefit more than just a few commuters who are unwilling to take public transport) and Mitsubishi’s tiny little electric is never going to work out on the general market without huge incentives… unlike the LEAF, which is nearly cost-effective without government backing, and which would save you much more given the same presumptions and conditions.

    Mind you… I think the 911 and Viper are a waste of money, too (since, if you’re interested in going on track, a secondhand Dodge Neon will serve the purpose much better), but c’est la vie.

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