Electric vs Gas Cars: Which Keeps Value Better?

Resale value is not a matter of ideology, environmental virtue, or technological enthusiasm. It is a market verdict. In 2026, that verdict is still shaped far more by risk perception, price volatility, and buyer psychology than by engineering merit. When people ask whether electric cars or gasoline cars keep their value better, they usually assume the answer should be rooted in which technology is “the future.” The used-car market does not work that way. It prices uncertainty, not destiny. And in that sense, 2026 remains a transitional and therefore dangerous year for resale value, especially for electric vehicles. *1

The uncomfortable truth for many EV advocates is that average electric vehicles still depreciate faster than average gasoline vehicles. According to large-scale depreciation studies by iSeeCars, electric vehicles lose more value over five years than any other major powertrain category, significantly more than the overall market average and far more than trucks or hybrids. *1 This is not because electric drivetrains are inherently bad products. It is because the market still treats them as a fast-moving, policy-sensitive, technology-driven category where today’s “cutting edge” can become tomorrow’s “outdated” very quickly.

That distinction matters. Depreciation is not a moral judgment. It is a pricing of risk. And in 2026, the risk profile of EV ownership is still higher and more complex than that of internal combustion cars.

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What “Holding Value” Actually Means in the Real World

When people talk about resale value, they usually imagine a single number: what they can sell the car for in a few years. In reality, the professional automotive industry uses a more precise concept: residual value, meaning the percentage of the original MSRP that a vehicle is expected to retain after a given period, typically three or five years. This is the backbone of leasing economics and the reason organizations like J.D. Power (via ALG) give annual Residual Value Awards. *2

Residual value is not about how good a car is in isolation. It is about how predictable its future market is. A vehicle that is boring, reliable, and easy to understand often holds value better than a vehicle that is technologically exciting but economically unpredictable. This is why some of the best value retainers in history have been Toyota Land Cruisers, Toyota Tacomas, and certain Porsche 911 variants—vehicles that are not necessarily cheap or simple, but extremely stable in market perception. *3

Electric vehicles, as a category, still lack that stability.

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1) Price Volatility in New EVs Destroys Used EV Anchors

Used car prices do not float freely. They are always anchored to the price of a comparable new car. When new-car prices are stable, used prices move slowly. When new-car prices are volatile, used prices become fragile.

Over the past few years, EV manufacturers—especially Tesla—have repeatedly cut new-car prices, sometimes dramatically and sometimes multiple times in a single year. Each time this happens, the entire used market is repriced downward overnight. Owners discover that their “three-year-old” car is suddenly competing with a brand-new one that is only slightly more expensive. J.D. Power has documented how EVs require significantly higher incentives and discounts compared to non-EVs, a sign of structurally weaker pricing power. *4

Gasoline vehicles, by contrast, rarely experience such abrupt, category-wide repricing events. Their depreciation curves are smoother, more predictable, and therefore safer for owners who care about resale.

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2) Incentives and Policy Create Artificial Demand Spikes and Crashes

Another structural problem for EV resale value is the heavy influence of government incentives. When subsidies are generous and easy to access, they pull demand forward. When they are reduced, restricted, or complicated, demand weakens, and used prices suffer.

In the United States, for example, the Inflation Reduction Act changed not only which new EVs qualify for credits, but also which used EVs qualify and under what conditions. This has created a two-tier market where some used EVs are suddenly much more attractive than others, not because of the car itself, but because of its paperwork. Recurrent and Cox Automotive have both documented how these incentive structures directly affect used EV pricing and liquidity. *5, *6

Gasoline vehicles are largely immune to this kind of policy-driven demand distortion. Their resale values are determined mainly by supply, condition, brand reputation, and fuel prices—not by whether a tax credit form is filled out correctly.

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3) The Flood of Off-Lease EVs Is Only Beginning

One of the least discussed but most important forces in the 2026 market is supply. A very large number of EVs were leased between 2022 and 2024. Those vehicles are now returning to the market in waves. When many similar cars arrive at auction at the same time, prices fall. This is not a theory; it is a structural feature of how used markets work.

Recurrent and industry auction data show that used EV supply is growing much faster than used ICE supply, and that this growth is putting downward pressure on prices, especially in mainstream segments. *5

Gasoline vehicles also have off-lease cycles, but their demand base is much broader and more geographically flexible. A used Corolla or Camry can be sold almost anywhere to almost anyone. A used EV is still constrained by charging access, climate, and buyer confidence.

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4) Battery Degradation: The Data Is Improving, the Perception Is Not

From a technical standpoint, modern EV batteries are aging better than many people expected. Geotab’s large-scale analysis shows average degradation around 1.8% per year, suggesting that many packs can remain very usable well beyond 200,000 kilometers. *7

But resale markets are not driven by engineering reports. They are driven by buyer fear and simplicity. A used-car buyer understands how to evaluate engine noise, transmission shifts, and oil leaks. They do not understand battery health curves, thermal management strategies, or DC fast-charging history. Even if the average battery is fine, the uncertainty discount remains.

This uncertainty is even stronger in hot climates, where multiple studies and field data show faster degradation under high heat and frequent fast charging. *8 The result is that buyers demand a larger price discount for used EVs to compensate for a risk they cannot easily evaluate.

Gasoline cars do not face this problem. Their failure modes are familiar, and familiarity itself has monetary value.

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5) Tech Cadence Makes Older EVs Feel Old Faster

This is perhaps the deepest structural issue of all. Internal combustion technology is mature. A five-year-old gasoline car feels broadly similar to a new one. An EV from five years ago can feel like it comes from a different era.

Range, charging speed, software integration, heat pumps, battery chemistry, and driver-assistance systems are all improving quickly. This is great for new buyers. It is terrible for resale values. Academic and industry research into second-hand EV markets consistently identifies rapid technological obsolescence as a core depreciation driver. *9

When the new product is dramatically better, the old product must become dramatically cheaper to remain attractive.

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Where This Leaves Gasoline Cars in 2026

Against this backdrop, it should not be surprising that gasoline vehicles—especially trucks, simple crossovers, and proven nameplates—remain the safer resale asset in 2026. iSeeCars’ data shows that trucks and hybrids depreciate much less than EVs on average. *1

This does not mean gas cars are “the future.” It means they are the stable present. And markets pay a premium for stability.

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The Nuance Most People Miss

Here is where I’m going to challenge your thinking directly.

If you conclude from all this that “EVs are a bad financial decision,” you are thinking too crudely.

The real conclusion is this: Average EVs are bad resale assets. Specific EVs, bought the right way, can be excellent financial decisions.

Likewise, some gasoline cars are absolute depreciation disasters.

The question is not EV vs gas. The question is:

Which specific model, at which price, under which ownership horizon?





References

*1 iSeeCars. (2023). Cars That Hold Their Value Best and Worst. https://www.iseecars.com/cars-that-hold-their-value-study
*2 J.D. Power / ALG. (2024). Residual Value Awards. https://www.jdpower.com/cars/awards/residual-value-awards
*3 Kelley Blue Book. (2024). Best Resale Value Awards. https://www.kbb.com/awards/best-resale-value-cars-trucks-suvs/
*4 J.D. Power. (2025). U.S. EV Market Outlook. https://www.jdpower.com/business/press-releases
*5 Recurrent Auto. (2024). Used EV Market Report. https://www.recurrentauto.com/research
*6 Cox Automotive. (2024). Used EV Market Trends. https://www.coxautoinc.com/market-insights/
*7 Geotab. (2023). EV Battery Degradation Study. https://www.geotab.com/blog/ev-battery-health/
*8 Recurrent Auto. (2023). Heat and EV Battery Degradation. https://www.recurrentauto.com/research/heat-battery-degradation
*9 International Council on Clean Transportation (ICCT). (2022). The Second-Hand EV Market. https://theicct.org/publication/second-hand-electric-vehicles/



Ownership Horizon: Why Time Is the Real Enemy of Bad Resale Decisions

Most people talk about depreciation as if it were a fixed property of a car. In reality, depreciation is a function of time. The same vehicle can be a terrible financial decision over six years and a perfectly rational one over two.

In 2026, this time dimension matters more for EVs than for gasoline cars because EV depreciation curves are steeper in the early years and flatter later. This pattern has been observed repeatedly in used market data. Cox Automotive and iSeeCars both show that many EVs lose a large percentage of their value in the first three years, after which the curve begins to normalize relative to the broader used market. *1, *2

This creates a counterintuitive result. If you buy a new EV and keep it for six or seven years, you absorb the worst part of the depreciation shock yourself. If you buy the same EV at three years old and keep it for another three or four years, you may experience depreciation similar to or even better than that of a comparable gasoline vehicle. The early owner pays the “technology risk tax.” The second owner often benefits from it.

Gasoline vehicles, by contrast, tend to have more linear and predictable depreciation curves. They do not usually experience such violent early repricing unless the model itself has a reliability scandal or a sudden loss of brand reputation.

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6) Leasing vs Buying: Why EVs Make More Sense as Leases in 2026

Once you understand that EV depreciation risk is concentrated in the early years, the logic of leasing becomes obvious. A lease is essentially a contract that transfers resale risk from the consumer to the manufacturer or finance company, using a pre-agreed residual value.

For years, manufacturers have used artificially strong residual assumptions and heavy subsidies to make EV leases look attractive. The reason is simple: leasing is one of the few ways to get risk-averse buyers into a product category that still scares them.

In 2026, this dynamic is still very much alive. Industry data from J.D. Power shows that EVs continue to rely more heavily on incentives and lease support than comparable ICE vehicles. *3 When the manufacturer is willing to take the depreciation risk, you should ask yourself why. The honest answer is that they know the resale outcome is uncertain.

For gasoline cars, leasing is often a convenience choice. For EVs, it is often a financial risk management tool.

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7) The Used EV Sweet Spot: Where Value Actually Exists

Here is one of the market’s great inefficiencies in 2026: many used EVs are undervalued relative to their actual utility.

Once an EV has already suffered its early depreciation shock, it often becomes a very compelling used purchase. Recurrent’s used EV studies show that three- to four-year-old EVs frequently offer extremely low cost per kilometer of remaining battery life, especially when compared to similarly priced used gasoline cars with higher maintenance complexity. *4

At this point in the lifecycle, the fear premium is already priced in. The second owner is not paying for cutting-edge technology. They are paying for transportation.

This is a place where rational buyers can outperform emotional ones.

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8) Why Hybrids Are Quietly the Best of Both Worlds

If you want a category that combines familiarity, efficiency, and strong resale performance, the data increasingly points to hybrids rather than pure EVs or pure gasoline vehicles.

iSeeCars’ depreciation data shows that hybrids, as a group, lose significantly less value over five years than EVs and often less than the overall market average. *2 The reason is not mysterious. Hybrids offer fuel savings without demanding behavioral change. There is no charging anxiety, no home installation, and no infrastructure dependency.

From a resale perspective, hybrids benefit from being boringly acceptable to almost everyone. And in used markets, universal acceptability is gold.

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9) Not All EVs Are Created Equal: The Brand and Segment Effect

One of the biggest analytical mistakes people make is talking about “EVs” as if they were a single product.

They are not.

A Tesla Model Y, a Nissan Leaf, and a Porsche Taycan live in completely different resale universes.

Premium brands with strong software ecosystems and strong charging networks tend to hold value better than compliance-style or budget EVs. Tesla, for all its pricing chaos, still benefits from brand gravity and infrastructure control. Porsche benefits from brand prestige and limited supply. Meanwhile, many first-generation or low-range EVs have been absolutely crushed in the used market because their functional usefulness is now too limited to justify anything but bargain pricing. *4, *5

The same is true for gasoline cars, of course, but the dispersion is much wider in EVs because the technology gap between “good” and “obsolete” is much larger.

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10) Gasoline Cars Are Not Automatically Safe Either

Now for a necessary correction to lazy thinking: not all gasoline cars hold value well.

Some gasoline vehicles are depreciation traps. Luxury sedans, overcomplicated crossovers, and models with poor reliability reputations can lose value just as fast as bad EVs.

Kelley Blue Book’s resale value awards and historical data consistently show that only certain categories—trucks, simple SUVs, and proven nameplates—perform well over time. *6 If you buy a gasoline car that is unpopular, overproduced, or expensive to maintain, you will not be saved by the fact that it burns petrol.

Technology is not the only thing markets punish. Bad positioning is punished too.

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11) The Psychological Factor: Why Buyers Still Overpay for “Familiar”

There is a deep behavioral bias in used markets: people pay extra for what they already understand.

This is one of the main reasons gasoline vehicles continue to outperform EVs in resale terms even when, on paper, the EV is the better machine. Buyers discount uncertainty. They premium comfort.

Economists would call this risk aversion. Used-car dealers call it “what moves fast on the lot.”

Until EVs become emotionally and culturally boring, they will continue to carry a resale penalty.

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12) The Climate and Geography Effect No One Wants to Talk About

Resale value is not global. It is local.

In regions with strong charging infrastructure, mild climates, and urban commuting patterns, used EVs are far more liquid and retain value better. In hot climates, rural areas, or regions with weak infrastructure, the opposite is true.

Recurrent’s geographic data shows massive differences in used EV price strength depending on location. *4 Gasoline cars do not suffer from this fragmentation to the same degree. They are geographically fungible.

This matters if you are buying in one market and selling in another.

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Where This Leaves a Rational Buyer in 2026

By now, the shape of the answer should be clear.

If your question is, “Which category holds value better on average?” the answer is still gasoline vehicles and hybrids. *2

If your question is, “Can I make a smart financial decision with an EV?” the answer is absolutely yes—but only if you understand where the depreciation risk is and who is paying it.

If you buy new, you probably pay it.
If you lease, the manufacturer probably pays it.
If you buy used, the first owner already paid it.

That is not ideology. That is market structure.

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References

*1 Cox Automotive. (2024). EV Depreciation and Used Market Trends. https://www.coxautoinc.com/market-insights/used-ev-market-trends/
*2 iSeeCars. (2023). Cars That Hold Their Value Best and Worst. https://www.iseecars.com/cars-that-hold-their-value-study
*3 J.D. Power. (2025). EV Incentive and Leasing Outlook. https://www.jdpower.com/business/press-releases
*4 Recurrent Auto. (2024). Used EV Market and Battery Health Research. https://www.recurrentauto.com/research
*5 Edmunds. (2024). Used EV Pricing Trends. https://www.edmunds.com/industry/
*6 Kelley Blue Book. (2024). Best Resale Value Awards. https://www.kbb.com/awards/best-resale-value-cars-trucks-suvs/