Elise and I recently went on a hike with another couple, and on our way up the mountain I learned from the guy all about how his car has lost $50 grand in value over just a few years. I didn’t think much of it; lots of cars have seen heavy depreciation, especially lately, so I figured he was just exaggerating. But then, when I got home, I recalled the conversation and decided to look up his car: A 2019 Audi E-Tron. And my god was I shocked with what I saw.
Depreciation is a part of life if you buy a new car, with a few exceptions like the Jeep Wrangler, Toyota Tacoma, and pretty much anything bought just before COVID and sold during that car-market nightmare. Among the worst cars when it comes to depreciation are expensive European cars. Buy a new Mercedes S-Class, for example, and you can expect to lose many tens of thousands of dollars in a really short span.
Another segment of the car market that has seen humongous depreciation is electric cars. So what if you blend 1. Expensive German Car with 2. Electric car? Well, you get a depreciation To The Max.
The headline of this article isn’t meant to be a joke, because people losing tens of thousands of dollars is no laughing matter. It can have a huge effect on someone’s livelihood if they end up buying a car whose value tanks just before they have to sell. On one hand, the cars that are depreciating worst are the ones purchased by folks who, at least in theory, can most afford it. On the other hand, I can see how this could blindside someone.
I mean, just look at the reviews of the Audi E-Tron when it came out in 2019; anybody would have thought they were buying a state-of-the-art machine. Motor Trend‘s headline was: “2019 Audi E-Tron Review: What a Way to Glide” and its subheading was “The EV wars are starting in earnest, and Audi has itself a real weapon.” Here’s how Motor Trend described how the E-Tron compared to others in its class, and even described it as “affordable”:
In the showroom wars, the e-tron’s primary enemies are the aforementioned I-Pace and Tesla’s Model X, as well as Mercedes’ upcoming EQC. A little smaller and pricier but quicker and more responsive, the Jag boasts an EPA range of 234 miles. The Model X is by far the costliest of the bunch—when you add desirable options it can soar well past $100K—but it’s also by far the quickest, as it can sprint from zero to 60 mph in 2.8 seconds with the extra-cost Ludicrous Mode. The Tesla also leads with a maximum claimed range of 325 miles. The e-tron, in contrast, is the most “normal” of the trio. Excepting the Mercedes, which starts at $68,895, it’s the most affordable with a base sticker of $75,795, offers a generous 57 cubic feet of cargo space with the rear seats folded down, and while it may not deliver the sizzling straight-line acceleration of the Model X or the halfback-like chassis moves of the I-Pace, it’s designed to charge quickly, glides over the road with unfailing refinement, and is built with battery longevity and unflagging performance as priorities.
CNET’s review was similarly glowing:
In that spirit, today I’d like to celebrate the $74,800 Audi E-Tron, a car I’ve been appreciating for nearly two months now. Audi’s first production electric car takes a subtly different but distinctive path to all-electric glory. There’s nothing ludicrous about this EV SUV and, frankly, I couldn’t care less what its Nurburgring lap time is. What I do know is that this is among the most comfortable, most soothing cars I’ve ever had the privilege of driving, and that makes it something special.
[…]Configured this way, at $77,290 including destination, this is not a cheap car. But it offers luxury appointments on par with similarly priced premium machines, plus the added benefits of that smooth, quiet, maintenance-free EV lifestyle.
It’s hard to argue with this practicality or with Audi’s wholly rational approach to building an EV. The e-tron is a competent, well-engineered piece that makes few compromises compared to Audi’s gasoline-powered SUVs. But at this point, buying an electric car—especially one that starts at $75,795—is still a bold, somewhat irrational choice, a decision to go against the grain…. But we’re not far enough into the EV era to know what’s right and wrong….
The Tesla Model Y launched just a few months after the Audi E-Tron, and then as other competitors like the Kia EV6, Hyundai Ioniq 5, and a boatload more joined in on the fun, prices tanked. Some of this is a result of EVs being seen as appliances whose value is determined predominantly by a single attribute (range), some of it is a result of early adopters having already bought their EVs and skeptics hesitating to make the plunge given infrastructure issues, part of it is a result of political uncertainty/rebates, and part of it is a result of the crazy price-cuts from Tesla.
In any case, look at what a 2019 Audi E-Tron — whose MSRP was $75,795 for the Premium Plus model and $82,795 for the Prestige model — costs nowadays:
Those cars only have about 50,000 miles on them, meaning they’ve lost over a dollar a mile! My god, a dollar a mile. If I knew my car would lose a dollar of value every mile I drove it, I’d sell it immediately. Check out the value trend over time:
Especially in the last couple of years, after the post-pandemic price-jump, the market has not been friendly to the E-Tron:
It’s worth pointing out that E-Trons and other EVs were eligible for the $7,500 EV rebate. Not to mention, I bet plenty of these were leased, and others were sold with money on the hood. But for those who bought them outright in 2019, even with the EV rebate: Yikes!
Here’s the gasoline-powered Audi Q7, for reference:
Now, you might be thinking that lots of expensive German cars depreciate a lot, and that’s definitely true. A 2022 Mercedes S-Class started between $110,000 and $120,000, and look at how cheap they are now:
That’s about 50 grand in just two years and 35,000 miles! Yikes! But even the mighty S-Class has nothing on the electric version of the S-Class, the EQS. That car started at $102,310 for the EQS 450+ and $119,110 for the EQS 580 4MATIC. (Less the EV rebate).
Now let’s have a look at what these machines are trading for:
That’s among the cheapest ones I’ve seen. Only $39,000 for a car that started at over $100 grand just two years prior! Surely this thing is flying off the shelf, right?
Apparently not! Here’s another EQS that lost 60 grand in 40,000 miles ($1.50 a mile):
And here’s an EQS 580 for good measure (this one actually being sold by a Mercedes dealership). These started at over $119,000, so this is also a car that lost over 60 G’s:
Just look at the pricing trends of the EQS:
Here’s
Here’s the S-Class, in case you’re curious (sorry about the scale from Cargurus):
As you can see, those expensive German cars are depreciating quickly, but the electric expensive German cars are losing value violently.
Yikes!
Thank goodness so many of these were leased or purchased with lots of money on the hood, and hopefully all of them got the $7,500 federal rebate, along with a potential $4000 rebate for the buyer of the used car (though that only applies to sub-$25,000 vehicles).
All Images: Cargurus (Unless otherwise specified)
Full disclosure; I have owned both a BEV, and a PHEV, but moved on from both to go back to ICE. The real tragedy to this story is not rich folks losing there arse on the Audi or Merc BEV’s, but the seriously bad depreciation of all BEV’s. All the money our government is throwing at this by way of incentives is tragic for all taxpayers. I’m in favor of the government spending taxpayers money for our defense and general infrastructure, but betting our money on trying to solve global warming (for the world) is folly.
There’s quite few of those EQS:s as taxis he in the Nordics. Haven’t heard any comments how they fare, but still seem to be popular. And with these gas prices there can be quite few hickkups to go back to diesel.
No surprise here.
I have been saying that the EV technology isn’t mature enough to be useful. That includes the “inability” for the batteries to catch fire at a whim and to “decay” over the time.
This fireman has been posting lot of videos in his YouTube channel about the battery fire. The sight and consequence aren’t pretty.
Germans are furious about the shocking devaluation of their BEV and the frustration of not selling their BEV as quickly as they hope. More and more of the first-time BEV owners would not consider the BEV as their next purchase.
Depreciation should be something you account for when buying your car.
That said, those who are this income bracket can probably afford it.
Doesn’t help that the E-Tron is ugly as an etron, does it…
If you make enough money to comfortably buy these cars new, who cares? Which is why they sell in spite of the depreciation.
Luxury car buyers just don’t care. David is not a luxury car buyer.
Often, vehicles like an S Class are corporate leases, and when they’re not corporate leases, the next common thing I notice is a personal lease. So, I don’t think wealthy people are keen on taking a bath for no reason, either…that’s how they would cease continuing to be wealthy.
With a lease, you are literally paying for nothing BUT the depreciation, plus interest and fees.
They don’t care – they want what they want. If you are an S-Class buyer, the cost of that car is couch cushion change for you.
Right, you’re basically “renting” for that rate, depending on the deals you catch and how you can manipulate the lease deal. Generally, though, my point about the corporate lease is that many wealthy people aren’t paying for it at all – their business or their employer are paying for it, which get a tax write off on the cost. Not to say there aren’t any private owners, but that’s what tends to drive many of them as lease machines – no need for the company to purchase, and they can write off their “rental” loss.
I was a paid tax preparer for years. You can write off ANY car for business use, there is nothing special about leases. The appeal of a lease is that the disposal cost is a known quantity, so if you are going to get a new car every 2-4 years anyway, leasing makes it “easy”. That they are often leased is really here nor there, somebody is still paying 100% of the freight of that depreciation, leasing doesn’t make it magically go away absent some of the heavily subvented leases the Germans used to love to do – but even there, they would give you just as big a discount on a purchase (BTDT).
The bottom line is that luxury car purchasers simply don’t care. They want that car, and they want it *new*. Which is largely WHY they depreciate so heavily. People in the market for this sort of thing don’t want someone else’s sloppy seconds and farts in the seats, so the price has to be commensurately lower.
The only thing this article has done is convince me to start reading reviews on e-trons because those prices are wild
I might get push back on this – but the appropriate measurement for vehicle depreciation is not $ per year or $ per mile – it is half life. It almost always works better as mileage is a limited influence on vehicle price.
Example: MegaVan has a half life of 6 years. Purchase $40k – 6 years later $20k – 6 years later $10k – 6 years later $5k.
It seems to more closely approximate a depreciation curve than any other metric (linear) that I’ve found so far.
“If I knew my car would lose a dollar of value every mile I drove it, I’d sell it immediately.”
What? uh, no. If your vehicle is hit with serious depreciation the best thing to do is drive it until the wheels fall off.
This car costs $80k, it doesn’t magically become more expensive because of depreciation. If you drive it for 10 years the depreciation mostly smooths out as it approaches its fully depreciated value. Whether it lost 20, 30, or 50% of its value in the first two years.
If I bought it, and I knew it was going to depreciate that much, yes, I would sell it immediately.
Almost every car depreciates the moment it drives off the lot.
Almost everyone knows that German Luxury Depreciation is a thing.
That’s why your BMW i3 is the same value as three months of groceries for a family of 4.
People who actually buy new German cars do not care what they’re worth in 3 or 5 years time. They don’t buy/sell cars like their investment advisor does puts on Tesla and GM or Oil Futures. Because they intend to drive their car til the wheels fall off – and they’re probably depreciating it on their taxes (over 10 years) as a business-use vehicle.
Meanwhile, people like me who buy CPO (off lease) German Luxury are happy to be able to purchase a like-new German car for @40-50% off MSRP.
If someone is that concerned about depreciation – the smart move would have been to not purchase a car at all in the first place.
“wait, uh no?” snarky intros like this are always followed by something stupid.
if you see depreciation coming you sell then buy a used example when the curve levels out.
“see it coming”. They depreciate the second you take it off the lot. If you know it will depreciate then you don’t buy it in the first place. If you already own it then it’s already too late.
You have a picture of an Audi, and the source is Mercedes? It’s not Mercedes Streeter, I am assuming?
OMG, $1.50 per mile? My LeSabre is currently at $0.16 per mile, and that’s if I abandon it by the side of the road.
Similar here. My Matrix is about $0.10 per mile (240K, bought for $20K), even when factoring in all the maintenance (guessing on that, though).