With all vehicles, you may be wondering if you can get a return on your investment. Even though electric bikes are relatively new, they still depreciate just like any other vehicle and lead to complicated questions about when to sell a used bike, and whether or not to buy a new or used bike. And to answer these questions, you’ll want to be aware of how well Electric Bikes hold their value.
A typical electric bike may lose value (depreciate) at about 5-8%/year. If you maintain your bike and its components (battery, motor, etc.) properly, it can hold its value better, and using your bike to offset car costs can quickly make this depreciation negligible compared to cost savings.
Even though electric bikes can depreciate, they’re still a solid investment that can save you an incredible amount of money over the long run. You may have some other questions like if the price of electric bikes will drop or how to add more value to your bike. Don’t worry; this article covers it all!
How Fast Does an Electric Bike Lose Its Value?
Figuring out the exact rate an electric bike depreciates can be incredibly tricky. Much like cars, electric bikes begin to depreciate once you purchase and ride them. Once you add on the innovation the market is experiencing, it takes a little digging to figure it out.
Take a look at the Men’s Turbo Vado 2.0 (by Specialized), which came out in 2018 priced around $3,500. You can now find the Turbo Vado 2.0 priced for $2,850 new, and you can find used models for around $2,000. Compared to the 2019 Turbo Vado 5.0 (by Specialized), which came out at a starting price of $5,150 can now be found for $4,600 new.
In general, there’s no exact number to figure out the depreciation rate of E-Bikes, but it’s useful to compare them to cars, which depreciate at around 10% to 15% per year. That being said, all bikes are going to be different, so each specific model’s resale value will vary.
Think about it in terms of the iPhone. A new model is coming out every year with more and more innovations. This frequency of release and innovation makes it hard to create a localized depreciation rate.
If you want an electric bike but you’re worried about depreciation, you can always cap your losses by simply getting a very cheap E-Bike to start with! Sure you may lose out on some features, but if the value goes down, you’re already in a good spot because you didn’t put that much value into the bike upfront via the money you traded for it.
A model like the GOOGO Electric Mountain Bike (on Amazon), at less than $1k, limits the value you can lose a lot more than an expensive bike would. But all that being said, is there a number you can use to figure out the depreciation rate?
What Number Should You Use for Calculating the Decrease in Electric Bike Value?
Let’s take a look at the two bikes we mentioned earlier. The Turbo Vado 2.0 originally came out around $3,500 and is now sold new at $2,850, causing it to lose about 20% of its initial value over three years. The 5.0, on the other hand, lost about 11% of its value over two years. Looking at these numbers, you can expect anywhere from a 5% to an 8% depreciation rate.
Keep in mind, this is one specific case, and every bike and model will vary. The five to eight percent depreciation rate is reasonable to use as a general rule of thumb but isn’t a strict law.
Instead, what you should do is look at previous year’s models of the bike you want and compare them to the price of their upcoming models. You can use that number to ballpark how much your bike will be worth in the future.
Will Electric Bikes Come Down in Price?
Based on the numbers above, we know electric bikes will go down in price over time. There are a few different things we can look at to better understand how this will happen.
Lithium batteries are one of the main components of electric bikes and have seen a decrease in price over the years and increased efficiency. Between 2010 and 2019, battery prices fell by 87%. It’s also predicted prices will drop another 50 percent by 2023. This price drop will surely benefit electric bikes and their production.
We can also look at similar markets seeing growth to get an idea of what could happen. Seeing as electric bikes are in the electric vehicle and eco-friendly transportation markets, we can use electric vehicles as a general gauge.
Considering the Price History of Electric Cars
Tesla’s first electric vehicle in 2006 (by Wikipedia) cost over $100,000 by today’s standards. Compare that to today’s Tesla’s Model 3, which has a starting MSRP of $39,990. This isn’t a strict rule either. The benefit here is that we have much more data on the electric car market and can spot some of the trends.
Seeing as e-bikes are relatively new and experiencing an increase in popularity and innovation, we don’t have much data to work with. Using the example above, the price of electric cars has dropped an average of 4% per year.
Again, this isn’t a hard rule, and the price drop of electric vehicles wasn’t a consistent four percent. With more and more innovation and increased demand, we can expect prices to drop just as electric cars have, just not at the same rate.
Considering the Explosive Growth of the E-Bike Industry
We can also look at the expected market growth of electric bikes to get another angle of the picture. In 2019, the global e-bike market was valued at around 23 billion USD. The market value is expected to reach around 42 billion USD by 2026.
With more and more electric bikes being produced, supply will go up, and if the demand remains the same, prices will go down. If we assume both supply and demand increase at the same rate, prices will be about the same.
We know a five to eight percent depreciation rate per year is a good rule of thumb. That means an electric bike you purchase today at, say, $2,500, will be worth anywhere from $2,150 to $2,000, assuming you kept it in good condition. Some riders have been known to buy a new electric bike every year to avoid depreciation and even some maintenance costs.
Although this is an expensive route to take, if you’re spending an extra $600 a year on maintenance fees, you can save a decent amount of money over the long term.
Keep in mind; these examples are all just theories and ideas on what will happen to the market and how it will affect the value of your electric bike. Just like electric vehicles, we’re probably not going to see a significant decrease in price for the next ten years. Prices will go down, but it will happen over time.
Getting the Most Value Out of Your Electric Bike
In a previous article, we looked at whether or not electric bikes were worth it and found you can save upwards of $700 a year if you use your e-bike for five commutes a week compared to a car! Let’s take a deeper dive into getting the most value out of your electric bike.
Let’s say you read our article on the best e-bikes under $1,000 and bought one off the list. If you replaced one commute five times a week with your new electric bike, it would pay for itself in less than one and a half years!
As you can see, your $1,000 investment has already paid off and returned its value. That means holding the value of your e-bike is just a bonus!
Comparing E-Bike Costs to Car Costs
We can also factor in other elements to really gauge how you can get the most value out of your electric bike. For instance, the average vehicle owner spent nearly $5,500 a year on their vehicle.
This number includes depreciation, fuel, insurance, loan interest, and maintenance fees. Let’s run the numbers for fuel, insurance, and maintenance fees.
The average car owner spends around $1,500 a year on car insurance. Electric bikes don’t require insurance, so you’re saving a considerable amount per year. The average vehicle requires around $800 of maintenance per year.
Electric bikes, on the other hand, require around $300. Now for gas, the average American spends $3,000 a year on gas. The average electric bike costs for commuting is approximately $70 per year. Now, the fun part, let’s add all these up!
You could end up saving over $5,000 a year if you completely replaced your vehicle with an electric bike. This goes to show how valuable an electric bike can truly be.
Finding More Value From an Electric Bike
Now, just for fun, let’s say you used your electric bike to deliver food for six hours out of the week. Before vehicle expense, delivery drivers can expect to make around $22 an hour. After expenses, delivery drivers make a disheartening 8 to 12 dollars an hour.
So, with an e-bike, if we were to say you lost a generous amount of $4 an hour, you could be making $16 an hour on the side. That’s just under $100 added each week with hardly any expenses! Keep in mind, these are rough numbers, and you would likely be saving a lot more.
The last way an electric bike delivers value is through health benefits. We can’t put a direct number on this, but the health benefits you get from using an electric bike every week surely add up. Better overall health means fewer medical bills and increased quality of life.
With all this in mind, it’s safe to say buying an electric bike simply pays for itself in the long run.
Best Ways to Hold the Value of Your Electric Bike
Just like any vehicle, the best way to hold the value of your electric bike is to properly maintain it. We have an entire article on servicing your electric bike you can check out here!
In general, there are three main things you can do to hold the value of your electric bike: complete tune-ups, proper maintenance before and after rides, and keeping the battery in the best shape.
Complete tune-ups: To maintain the value of your electric bike, you’ll want to get a complete tune-up at least once a year and as needed. Considering getting a total tune-up quarterly or bi-yearly is also an intelligent choice.
These tune-ups will take care of some of the sensitive parts like the derailer/chain, run battery/motor diagnostics, true the wheels, and tighten the bolts/bearings. This will keep your electric bike in peak shape for longer.
Maintenance before/after rides: Doing safety checks before each ride ensures your safety and the longevity of the bike. You can identify potential problems before they become too expensive or result in unnecessary damage. Cleaning your bike, degreasing, and lubricating the chain after rides will ensure it’s in good condition.
Battery maintenance: One of the most expensive parts of an electric bike is the battery. Properly storing, charging, and caring for the battery guarantees your getting the greatest lifespan out of it. If you don’t properly care for your battery, you may have to replace it more often, which creates additional costs.
For example, let’s say you bought an electric bike for $1,200. Now, let’s say you didn’t properly maintain the battery and had to replace it twice over the span of two years, costing you around $450. If we factor in the 8% depreciation rate from earlier, you could sell this bike for about $1,000 after two years.
Add on the costs of batteries, and you’re losing nearly $650! Keep in mind these are rough numbers, but as you can see, the battery is one of the most crucial parts to maintain.
Besides proper maintenance, you can also buy higher-quality electric bikes from the get-go to increase your value over the long run. Well-known and sought-after brands are going to hold their value longer than something you bought at a K-Mart.
Due to the constant innovation, lower-quality models are going to depreciate even faster than something that was cutting-edge. Increasing the budget of your initial investment can ensure your getting more re-sale value down the line.