The EV Ownership Reality: What Every Electric Car Owner Notices by Year Four

When I bought my Model 3 in early 2021, I calculated everything. I knew what I’d save on gas. I knew maintenance would be cheaper—no oil changes, fewer brake replacements thanks to regenerative braking, simpler drivetrain. I knew the federal tax credit would help offset the purchase price. I even factored in home charging costs and compared them to what I was spending at the pump. On paper, it all made sense.

What I didn’t calculate—because I had no way to know—was what the car would be worth three, four, or five years later, and how that would affect the total cost of ownership. Not just the resale value in isolation, but how that value would compare to the depreciation curve of a comparable gas car I might have bought instead. This isn’t about EVs being bad investments or depreciating faster than expected. It’s more nuanced than that. It’s about the specific way EVs lose value, the factors that drive that depreciation, and how it interacts with rapidly changing technology and pricing in the EV market.

In this article, I’ll walk through what I’ve learned after four years of ownership, what I wish I’d understood earlier, and how to think about this if you’re buying an EV today. This isn’t a warning against electric vehicles. It’s a clearer picture of the financial reality that emerges over time.

The Situation

I bought my 2021 Model 3 Long Range for around $49,000 after factoring in the tax credit available at the time. It was my first EV, and I’d done months of research. The car had about 350 miles of rated range, solid performance, and Tesla’s Supercharger network, which was the best in the country. I was coming from a paid-off Honda Accord, so this was a significant purchase, but I felt confident it was the right move.

The math seemed straightforward. I was spending roughly $200 a month on gas with my old commute. Electricity would cost me maybe $40–50 a month charging at home. No more oil changes, no transmission services, no exhaust system repairs. I figured if I kept the car for six or seven years, the savings would add up substantially, and the resale value would be reasonable because EVs were still relatively new and demand was growing.

That assumption wasn’t unreasonable in 2021. EV inventory was tight. Gas prices were climbing. The infrastructure was expanding. The future looked like it was moving toward electric, and being an early adopter felt like a smart financial play, not just an environmental one.

The Common Assumption

Most EV buyers, including me, assume that while EVs might depreciate, they’ll do so at a rate comparable to similar gas-powered cars, especially given the operating cost savings. The logic is simple: if you save $150 a month on fuel and maintenance, that offsets depreciation to some degree, and you come out ahead over the ownership period.

This assumption exists because it’s how we’ve always thought about cars. A well-maintained Honda or Toyota holds its value. A luxury sedan depreciates faster but predictably. You can look at historical data and get a reasonable sense of what your car will be worth in five years. EV buyers expected the same patterns to hold, maybe with a slight premium because the technology is newer and more desirable.

The problem is that the EV market isn’t behaving like the traditional used-car market. It’s behaving more like the smartphone market, where newer models don’t just add incremental improvements—they fundamentally change what’s possible, and older models lose value accordingly.

The Turning Point

About six months ago, I started casually looking at what my car might be worth if I decided to upgrade. I wasn’t in a hurry, but I was curious. I checked a few trade-in estimators, browsed listings for similar cars, and talked to a couple of dealerships.

The numbers surprised me. My 2021 Model 3 Long Range, which I paid $49,000 for, was being valued at around $23,000–$26,000 depending on condition and mileage. I had about 52,000 miles on it, which is slightly higher than average but not excessive. The car was in good shape. No accidents, no issues, well-maintained.

That’s roughly 50% depreciation in four years. For context, a 2021 Honda Accord EX that sold for about $28,000 new would typically be worth around $20,000–$22,000 today with similar mileage. That’s about 25–30% depreciation. A 2021 BMW 3 Series that sold for $45,000 might be worth $28,000–$30,000 now, which is closer to 35% depreciation.

What made it more frustrating was seeing that a brand-new 2024 Model 3 Long Range, with better range, updated interior, and improved technology, was selling for around $42,000 after incentives. That’s less than I paid for my used 2021 model when I bought it new. The value proposition for a used EV collapses when new ones are cheaper and objectively better.

What Most People Miss

The specific thing most EV owners don’t realize until they’re a few years in is this: EV depreciation is driven more by technology improvement and price cuts on new models than by mileage or condition.

With gas cars, depreciation follows a relatively predictable curve based on age, mileage, and condition. A five-year-old Camry with 60,000 miles is worth less than a two-year-old Camry with 30,000 miles, but both hold value because new Camrys aren’t dramatically different. The 2024 Camry is nicer than the 2019 Camry, but not so much better that the older one feels obsolete.

EVs are different. In the four years since I bought my Model 3, several things have happened:

• New EVs have significantly more range. Cars that had 250 miles of range in 2020 now have 350–400 miles in updated versions.

• Charging speeds have improved. Newer EVs can charge faster, meaning less time at charging stations.

• Prices have dropped. Manufacturers are scaling production, and competition has driven prices down. The same car I bought for $49,000 is now available new for less, with better specs.

• Incentives have expanded. The Inflation Reduction Act created new tax credits that make new EVs even more affordable.

• Battery technology has advanced. Newer batteries are more efficient, degrade slower, and cost less to replace.

All of this means that a used 2021 EV isn’t competing against a used 2024 EV. It’s competing against a new 2024 EV that’s better in every measurable way and costs roughly the same or less. That’s a losing battle.

Here’s a real-world example. A friend bought a 2020 Chevy Bolt for about $37,000. In 2024, a new Chevy Bolt EUV with more space, better range, and updated technology was selling for around $27,000 after incentives. His four-year-old Bolt was worth maybe $12,000. He lost $25,000 in depreciation while new buyers were getting a better car for $15,000 less than he paid. That’s brutal math.

This isn’t a Tesla-specific problem. It’s happening across the industry. Nissan Leafs, early Audi e-trons, first-generation VW ID.4s—they’re all experiencing steep depreciation because the new versions are dramatically better and cheaper.

Consequences of Ignoring It

In the short term, this doesn’t affect your day-to-day ownership. You’re still saving on fuel and maintenance. The car still works. But it affects your financial planning in ways that aren’t immediately obvious.

If you financed your EV, you might find yourself underwater on the loan sooner than expected. Depreciation is outpacing your principal payments, so if you need to sell or trade in, you could owe more than the car is worth. This is especially common for people who put little or nothing down and financed over six or seven years.

In the medium term, it changes the calculus of when to sell. With a gas car, there’s often a sweet spot around year five or six where you’ve gotten good value out of the car, depreciation has slowed, and you can sell without taking a massive loss. With an EV, waiting longer doesn’t help as much because the technology keeps leaping forward. Your 2021 EV in 2027 will be competing against 2027 EVs that make it look ancient.

In the long term, it affects total cost of ownership. Yes, you save on operating costs, but if you lose an extra $10,000–$15,000 in depreciation compared to a gas car, those fuel savings take a lot longer to offset the difference. For many owners, the break-even point is pushed further out than they expected.

Financially, this also means you have less equity to roll into your next vehicle. If you planned to trade in your EV after four or five years and use the equity as a down payment, you might find there’s less equity than you anticipated. That can mean higher payments on the next car or needing to bring cash to the table to cover the gap.

How to Check or Think About This Properly

If you’re considering buying an EV, here’s how to think about depreciation more realistically.

Step one: Don’t assume your EV will hold value like a gas car. Instead, assume it will depreciate more like consumer electronics. Expect 40–50% depreciation in the first three to four years, especially if you’re buying a model that’s likely to see significant updates or price cuts.

Step two: Research the manufacturer’s track record. Tesla, for example, has a history of cutting prices on existing models and introducing updated versions frequently. That’s great for new buyers but terrible for resale value. Other manufacturers, like Porsche or Rivian, have been more stable with pricing, which helps used values hold up better.

Step three: Factor in the total cost of ownership, not just monthly savings. Calculate what you’ll save on fuel and maintenance, then subtract what you’re likely to lose in extra depreciation. If the EV still makes sense financially, great. If it only makes sense if you keep it for ten years, be honest about whether you’ll actually do that.

Step four: Consider leasing instead of buying, especially for your first EV. Leasing insulates you from resale risk. You pay a fixed monthly payment, and at the end of the lease, the residual value is the leasing company’s problem, not yours. Given how fast EV technology is changing, leasing makes more financial sense than it does for gas cars.

Step five: If you do buy, plan to keep the car longer than you might with a gas vehicle. The depreciation curve is steepest in the first few years. If you can hold onto the car for seven, eight, or ten years, the operating cost savings will eventually outweigh the depreciation hit. But if you’re someone who trades in every three to four years, an EV might not be the best financial choice right now.

Common Myths and Misunderstandings

Myth 1: EVs hold their value better because they have fewer moving parts. Fewer moving parts mean lower maintenance costs, but that doesn’t translate to better resale value. Resale value is driven by what buyers are willing to pay, and buyers are choosing newer, better, cheaper EVs over used ones.

Myth 2: Battery degradation is the main reason EVs lose value. Battery degradation is a factor, but it’s not the main driver. Most modern EV batteries hold up well over the first five to seven years. The bigger issue is that new EVs have better batteries, more range, and lower prices, making older EVs less attractive.

Myth 3: Premium EVs like Tesla hold value better than budget EVs. Tesla actually has some of the steepest depreciation because they aggressively cut prices and update models frequently. Premium EVs from Porsche or Mercedes tend to hold value better because they update less often and don’t slash prices as dramatically.

Myth 4: The used EV market will stabilize once EVs become mainstream. It might, but we’re years away from that. As long as battery technology and charging infrastructure are improving rapidly, older EVs will struggle to compete with newer ones. Stability will come when the improvements slow down, and we’re not there yet.

Myth 5: You can offset depreciation by installing a home charger and selling the car with it. Home chargers add convenience, but they don’t add resale value. Most buyers assume they’ll install their own charger, and the one you installed is specific to your home’s electrical setup. It’s not a selling point.

When It Matters Most (And When It Doesn’t)

This depreciation reality matters most if you’re financing an EV with little down and planning to trade it in within three to five years. It also matters if you’re buying a model that’s likely to see price cuts or major updates soon. First-generation EVs from manufacturers new to the market—like VW’s ID.4 or Ford’s Mach-E in their early years—tend to depreciate faster because the second and third generations are significantly improved.

It matters less if you’re paying cash and planning to drive the car into the ground. If you’re keeping it for ten years, the resale value in year four doesn’t affect you. It also matters less if you’re leasing, since the residual value is locked in at the start of the lease.

It doesn’t matter much if you’re buying a used EV at already-depreciated prices. If you can buy a three-year-old EV for 50% off its original price, the worst of the depreciation has already happened. You’re getting a good deal, and future depreciation will be slower.

There’s no universal answer. A Model S Plaid with cutting-edge performance will depreciate differently than a Nissan Leaf commuter car. A limited-production Rivian might hold value better than a mass-market Chevy Bolt. Knowing where your specific EV sits in the market helps you make smarter decisions.

Final Takeaway

I don’t regret buying my Model 3. I’ve enjoyed driving it, I’ve saved money on gas and maintenance, and it’s been reliable. But if I’d understood four years ago what I understand now about EV depreciation, I might have leased instead of buying. Or I might have bought a cheaper EV with the expectation that I’d lose more in depreciation. Or I might have just kept my Accord a few more years and waited for the market to mature.

The lesson isn’t that EVs are bad investments. It’s that they’re different investments, and the traditional used-car playbook doesn’t apply. The technology is moving too fast, the pricing is too volatile, and the market is too new. That doesn’t mean you shouldn’t buy an EV. It means you should go in with realistic expectations about what it’ll be worth when you’re ready to move on.

That moment last month, when I saw trade-in values for my Model 3 and realized how much the market had shifted, wasn’t a crisis. It was just information I wish I’d had earlier. I’m still driving the car. I’m still happy with it. But I’m thinking differently about my next move. If I buy another EV, I’ll lease it or plan to keep it longer. If I buy used, I’ll look for cars that have already taken the depreciation hit. And if I go back to a gas car for a while, I won’t feel like I’m making a mistake—I’ll just be making a choice based on the financial reality I’ve learned over four years. That’s not regret. That’s experience. And if you’re considering an EV now, you’re getting that experience upfront, which puts you ahead of where I was.