Without a question of a doubt, the future of the automobile is electric. Whether we like it or not, it is the way to the future. Electric cars are great machines, silent, smooth, quick, but still expensive. However, the other benefit is zero tail-pipe emission, because there isn't a tailpipe on an EV for obvious reasons.

But when you factor in the entire manufacturing journey of electric cars, it raises quite a few questions about its actual impact on our planet. There are still quite a lot of carbon emissions during the manufacturing process of an EV. But many automakers are working towards streamlining their businesses, with goals to be entirely carbon-neutral in the next few decades. It is still early days for the electric vehicle, but the path continues to get clearer by the day with innovations.

Tesla proved that an EV is a viable alternative to the traditional ICE motorcar. The legacy automakers, Mercedes-Benz, BMW, Jaguar, Volvo, VW, and more followed suit. All of them make some great electric vehicles and the demand for them is consistently growing around the world.

Why then, do electric cars depreciate far more than their gasoline or diesel-powered counterparts? The answer is not as simple as you think and yet, yet not very complicated either.

We highlight why electric cars depreciate faster than ICE-powered cars, but not Tesla.

Update April 2022: This article was updated with new information about electric cars.

Common Beliefs And Myths About EVs

2017 Nissan Leaf
Nissan

Many traditionalists are not convinced that the ICE is on its way out. Most shrug it off as just a fad. Some raise the question about the longevity of the Lithium-ion batteries that power them, and recycling them.

However, this notion is both correct and incorrect. The fact is that the electric vehicle is a new technology. The infrastructure and ecosystem to support it are still being developed around the world. It was the same with combustion-powered vehicles. When they were introduced in the late 1890s, people did not accept the technology at the time favoring their coaches or horsedrawn carriages. For them, machines could not replace the trusted 'horse'-power. Look at us now... It takes time for new technologies to be accepted by the market.

For some, maintaining an electric car is also a cause for concern. People are wary of the costs of maintenance after the warranty runs out. With only one moving part in the electric motor and a few other components, EVs are easier to maintain than traditional ICE-powered models. They are more prone to software glitches, than mechanical wear and tear.

The current crop of EVs is like the early laptops or mobile phones. Innovative, but they were obsolete very quickly after a breakthrough that made them more accessible. EVs are currently in the infancy stage, thus expensive. However, a breakthrough in battery technology could help provide comfort against the currently existing woes of the electric vehicle lifestyle.

The lack of awareness, demand for used EVs for the most part, and the battery deterioration are one of the major factors at play. These are the key reasons why electric vehicles depreciate more than ICE-powered cars.

RELATED: Here's Why Hydrogen Is Better Than Battery-Powered Electric Vehicles

Why Teslas Hold Their Value

Tesla Model X
Via: Tesla

A new sedan depreciates 39% after three years while trucks do a little better at 34%. Electric vehicles drop an astonishing 52%. While EVs like the Nissan Leaf and Chevy Volt EV depreciate heavily, Tesla models tend to hold their value better and are comparable to their traditional counterparts.

According to a survey by iseecars, a Tesla Model S depreciates by 36.3 percent while a Model X holds its value a bit better at 33.9 percent. However, because of the demand for the Model 3, and Tesla's unable to keep up, the compact electric car holds its value the best at a staggering 10.2 percent after three years. That is outright astonishing, but unsurprising.

While this does indicate that Tesla is at the forefront of the game, it doesn’t mean that the other EVs in the market like the Nissan Leaf or the Chevy Volt are bad. So what’s the actual reason behind these numbers?

RELATED: This Is The True Cost Of Owning A Tesla Model 3

Why Do Other EVs Lose Value?

The 2017 Chevrolet Bolt.
Via: Chevrolet Press Room

A base Nissan Leaf, in 2017, cost about $31,000. With federal tax rebates, the Leaf's price would drop to about $22,000. Five years down the line, the same car is currently worth between $8,000 to $14,000. If you take the tax benefit as a discount, that is not a bad deal,

On the flip side, due to the derireability for Tesla's electric models, they are in high demand and people are willing to pay more for them. The automaker doesn't offer any tax rebate incentives and charges a premium due to the high demand for the Model 3. This allows for the Model 3 to retain its value more than others. But Teslas and the Model 3 in particular is an exception to the rest of the market that does lose value.

In general, electric cars will continue to depreciate at a higher rate for now. But as time progresses and more EVs are on the road, prices will begin to stabilize. People around the world are beginning to clean up after themselves and their emissions for the sake of the planet. We may witness a time when ICE-powered cars become relics in the future. Electric vehicles, or some other form of propulsion, could one day become the norm.