Dec 22, 2025
When it comes to car ownership, depreciation can quietly erode your wealth more quickly than more visible costs, like insurance and repair bills. On average, new cars depreciate by about 30% in the first two years. Every year after that, new cars tend to depreciate by about 10% (1).
For example, if you bought a new car worth $50,000, it would be worth, on average, about $35,000 in two years. But some new cars depreciate at an even faster rate.
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A recent study from U.S. News & World Report found which new cars depreciated the fastest in 2025 (2). You might be surprised to learn that most of the vehicles that depreciated quickly were luxury sedans, and mostly EVs.
Buying one of the cars on this list could represent a major setback to your finances after a significant depreciation blow.
Fastest depreciating cars in 2025
The cars reported to depreciate the fastest seemed to have one notable thing in common: They were all electric vehicles.
Here’s a look at the cars that lost the most value in 2025, according to the U.S. News research, from fifth to first:
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#5 2022 Tesla Model 3 This model saw a -53.31% depreciation, with an average value of $29,315 lost.
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#4 2022 Lucid Air This luxury EV, which debuted in 2022, saw a -54.74% depreciation, with an average of $70,172 lost in value. Uncertainty around purchasing an EV, from a startup and recent price cuts for new models, is pushing down the value of luxury EVs, including this American-made model, notes industry watchers at DaxStreet (3).
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#3 2022 Tesla Model X A -55.23% depreciation and an average of $71,792 in value lost hurt the wallets of Tesla Model X owners in 2025.
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#2 2022 Tesla Model Y The Tesla Model Y saw a -56.64% depreciation and an average of $38,510 in value lost. Even as the company’s more affordable model, depreciation costs can add up quickly.
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#1 2022 Tesla Model S Tesla Model S owners watched their vehicle’s value plummet by an average of $74,132, with a -61.53% depreciation.
With Tesla’s recent strategy of aggressively lowering its prices for new cars, the used models followed suit and were almost instantly worth less. Additionally, consumer demand for EVs is shifting. U.S. EV sales fell by roughly 40% in November 2025, according to Cox Automotive data released to Reuters (4), which coincided with the expiration of the popular $7,500 EV credit under Trump’s ‘Big Beautiful Bill.’ As drivers downshift their enthusiasm for EVs, these models may continue to see above-average depreciation rates.
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Factors that can fuel above-average depreciation
When you buy a car, you can expect to feel the effects of depreciation. That’s especially true when you purchase a new car. If you purchase a vehicle that’s a few years old, you can avoid the worst hit of depreciation, which tends to happen in the first two years that a vehicle is on the road (1).
Beyond opting for a reliable used car, avoiding a massive depreciation hit might start with avoiding the worst offenders. According to this list, the worst cars for depreciation now seem to be luxury EVs.
In segments where the technology surrounding vehicles is changing quickly, like EVs, cars that are just a few years old can feel outdated as new technology comes along. In contrast, vehicles with proven track records tend to maintain their value the best. For example, Honda Civics and Toyota Tacomas tend to retain their value well over time, noted DaxStreet (3).
As you consider your options, prioritize looking for dependable brands that offer long-term reliability over luxurious features. Seeking out vehicles with broader market appeal, like hybrids, could help you avoid too much depreciation. Additionally, consider checking the depreciation for previous model years of the vehicle you have in mind to help you avoid driving home with a money pit.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Kelley Blue Book (1); U.S. News & World Report (2); DaxStreet (3); Reuters (4)
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Sarah Sharkey is a personal finance writer who enjoys helping people make optimal financial decisions for their situation. She loves digging into the nitty-gritty details of financial products and money management strategies to root out the good, the bad, and the ugly. Her goal is to help readers find the best course of action for their needs.
