In contrast to Tesla, Ford expects its all-electric Mach-E to lose resale value fast

Resale value is a sore spot with most electric cars—EVs tend to lose value faster than comparable ICE vehicles, both because of concerns about battery capacity, and because the fast pace of improvement has been making new EVs obsolete pretty quickly (except for those that feature over-the-air updates). Furthermore, only new cars are eligible for the US federal tax credit, so in a sense, an EV from an automaker that’s still eligible for the credit loses $7,500 of its value the moment it’s driven off the dealer’s lot.

Above: Ford is pitting its all-electric Mustang Mach-E directly against Tesla (Source: Ford / Tesla)

The well-known problem of poor resale values causes many drivers to choose to lease, rather than buy, EVs. Some automakers forecast the residual values of their vehicles at the end of a three-year lease, and share these estimates with their dealers. A member of the Mach-E Club (via InsideEVs), who goes by the handle ReturnOfTheMack, recently revealed some information from a bulletin of lease residual values that Ford sent to its dealers, and it appears that the automaker is expecting its upcoming Mach-E electric crossover to exhibit extremely poor resale values.

According to ReturnOfTheMack, Ford has advised its dealers that it expects the Mach-E to retain only 39 to 40 percent of its MSRP after three years, depending on the trim level.

The much-anticipated Mach-E is already in production, and Ford says it is “on schedule to start customer deliveries in late 2020.” However, we haven’t heard of any customer deliveries as of this writing.

Like every other EV currently in the pipeline, the Mach-E is being touted (at least by the media) as a challenger to Tesla, the first of a wave of new models from the legacy brands that will swamp the upstart EV-maker. We’ll see about that, but comparing Tesla’s real-world depreciation figures to Ford’s expected ones doesn’t inspire much fear that Ford will take a substantial bite out of Tesla’s market share.

Above: Instead of Tesla's Supercharger network, the Mach-E will utilize other charging networks like Ionity (Source: Ford)

In July, iSeeCars.com (via InsideEVs and Teslarati) reported that the Tesla Model 3 tends to retain 90 percent of its MSRP after three years. This is in line with numerous other studies of the issue (and anecdotal evidence from car buyers with lower budgets, who are disappointed that there are no bargains to be had on used Teslas). A 2018 study by Loup Ventures came up with similarly favorable results for Model S, finding that, after 50,000 miles, a typical Model S will have lost around 28% of its original value, whereas competing models in the luxury sedan class will have lost an average of 38%.

Why is Ford so pessimistic about the Mach-E’s expected resale value? Commenters on the Mach-E Club forum have offered several possible explanations. Ford’s previous electric model, the Focus Electric, was a compliance car with limited range, and its resale value dropped faster than one of Wile E Coyote’s anvils. However, the Mach-E can’t be compared to the Focus Electric—Ford’s new EV has vastly superior technology, it offers plenty of range, and it shares its styling with one of the most popular sports cars of all time. No one is expecting the Mach-E to recapitulate the Focus Electric’s dismal showing.

The more likely explanation for the pessimism is that Ford is simply playing it safe. For Ford, EVs are still an R&D project, and the company and its dealers are probably expecting sales of the Mach-E to be modest. The bean-counters may figure that it’s better to keep their estimates of resale value on the conservative side, and leave room for a pleasant surprise.

Of course, we all hope that they’re wrong, and that the Mach-E will be a big success in every way. Tesla has shown that EVs can have excellent resale values, and the more new models demonstrate this, the more new-car buyers will choose to go electric.

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Written by: Charles Morris; Source: Mach-E Club via InsideEVs