Study Finds EV Residual Value Gap in Europe Smaller Than Headline Figures Suggest

A new analysis indicates that the depreciation gap between battery-electric vehicles and internal combustion engine cars in Europe is significantly narrower than raw market data implies. The study, which examines residual value trends from 2020 to 2026, argues that standard calculations often overlook critical economic factors such as inflation, purchase subsidies, and acquisition taxes.

What Happened

According to the report, when adjusted for inflation, purchase subsidies, and acquisition taxes, the 2025 residual value gap between BEVs and petrol vehicles falls from 12.9 percentage points to 7.7 percentage points. The analysis further notes that when used BEVs are compared against current new vehicle prices, the gap narrows even more, to 2.6 percentage points. This suggests that buyers value used electric vehicles much more closely to their petrol counterparts than traditional residual value metrics indicate.

The study highlights that the European BEV market is not moving uniformly. Spain shows stable BEV residual values, France remains relatively resilient, and Italy has experienced sharper declines. Additionally, smaller BEVs are retaining value better than larger, more expensive models, and European brands tend to hold stronger values compared to other manufacturers.

Why It Matters

The findings challenge the narrative that electric vehicles suffer from a structural lack of demand in the used car market. The report states that the apparent depreciation gap is largely driven by temporary market dynamics, policy design, and falling new BEV prices. As new electric cars become cheaper due to competition and discounts, the resale value of existing used models naturally drops in comparison, a dynamic that does not affect the underlying demand for the used vehicles themselves.

Signs of stabilization are emerging. The decline in BEV residual values over the last two years appears to be tailing off. In the second half of 2024, the decrease was 2.3 percentage points, whereas in the second half of 2025, it was only 0.7 percentage points, showing less volatility than petrol vehicles. To lock in this progress, industry groups like T&E recommend standardized battery health certifications and OEM-led approved-used schemes. For instance, BYD’s certified pre-owned program includes a 179-point inspection and a guaranteed battery health score of 90, while Arval has issued over 30,000 battery health certificates across the UK and EU.

The Bottom Line

While raw data shows electric vehicles depreciating faster than combustion cars, adjusted metrics reveal a much smaller gap that is gradually closing. The market is showing signs of maturity with reduced volatility and stabilizing values. Continued adoption of battery health certificates, transferable warranties, and targeted policy support is expected to further reduce buyer uncertainty and support stronger second-hand EV demand.