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BluSmart’s collapse shows how fast EVs can become worthless
This article was originally published in Rest of World, which covers technology's impact outside the West.
The resale value of electric vehicles is collapsing worldwide, hurting private owners and fleet operators.
The crisis became especially apparent when BluSmart, India's pioneering all-electric ride-hailing service, collapsed in April amid financial fraud allegations. The Delhi-based company's fleet of thousands of cars, originally worth over $12,000 each, suddenly flooded the market at about $3,000.
For Tesla owners in the US, their 2023 Model Ys are worth 42% less than what they paid two years ago, while a Ford F-150 truck bought the same year depreciated just 20%. Older EV models depreciate even faster than newer ones.
The crisis exposes the fundamental problem that nobody really knows what electric cars are worth in the secondhand market, as their value is largely tied to batteries with uncertain lifespans.
“For gas cars, there's a 100-year process behind them based on odometer and major maintenance schedules and the expected life of combustion engine parts,” said Andrew Garberson, head of growth and research at Recurrent, a Seattle-based startup that evaluates the wear and tear on used EVs to bring transparency to the secondhand market. “Electric cars have fewer moving parts, and a lot of the value of the car is tied up in one component – the battery.”
A UK-based study found three-year-old EVs lost more than half of their value compared with 39% for gas cars. Another study conducted by Boucar Diouf, an EV researcher and professor at Kyung Hee University in Seoul, found EVs in the US can lose as much as 60% of their value over three to five years, compared with less than half for traditional vehicles.
For fleet owners and operators – across sectors from ride-hailing to rentals to logistics – pledging to go green, this value disaster is threatening to derail the sustainability movement.
Florida-based car rental company Hertz, which bought 100,000 Teslas in 2021, reported a $2.9 billion loss in 2024, driven largely by plummeting EV value, according to its February 2025 earnings call.
The company was hemorrhaging more than $530 a car monthly by late 2024, due to high upfront costs, steep insurance premiums, and long repair and restoration lead times, according to EV news publication InsideEVs.
Hertz dumped 30,000 EVs – Teslas bought for more than $40,000 ended up on its website for resale at prices under $20,000. As of October 8, it listed a Model Y for $27,000. A new Model Y cost $45,000 in the US. until earlier this month, when Tesla launched a more affordable version at just under $40,000.
“Fleets feel EV residual risk the most because they model total cost of ownership to the decimal and have to remarket thousands of units,” Jack Carlson, CEO of Carvai.ai, an AI-powered vehicle research and shopping platform, told Rest of World. “Retail buyers worry too, but mostly about battery health and charging. Fleets worry about the exit price.”
Ironically, Tesla still represents the best-case scenario, holding on to resale value better given its years of experience and brand-building. Chinese newcomers like BYD, Nio, and XPeng tend to have lower resale value in comparison, Mariusz Sawula, CEO of Poland-based autoDNA, a provider of vehicle history reports, told Rest of World.
“Premium brands consistently retain higher resale value than mass-market brands, for both ICE [internal combustion engine] vehicles and EVs. No one knows what entirely new Chinese marques will cost in the secondary market – for instance, what a five-year-old Omoda will fetch,” Sawula said, comparing the likes of Tesla to a sub-brand of Chinese carmaker Chery.
The depreciation crisis also varies by region. While Japanese and US consumers remain skeptical, more EV-friendly markets support strong resale prices, according to Justin Fischer, an automotive expert at vehicle-trading company CarEdge.
“In markets where consumers are open to the idea of going electric, like China, Norway, and Costa Rica, resale values are supported by this higher demand,” Fischer told Rest of World.
North America's vast highways and sprawling distances create a tough environment for used EVs, Karl Brauer, who has reviewed thousands of vehicles since the mid-1990s, told Rest of World. Europe, with its denser cities and shorter commutes, offers more stability in the used EV market compared to the US or Canada. Distance is just one of several limitations, which also include climate sensitivity and charging downtime.
“While an electric vehicle is ideal for shorter trips in urban areas with moderate temperatures, they aren't as effective as traditional cars for long-distance travel or when the temperature is very high or very low,” Brauer said. “Even electric vehicles with larger batteries and longer ranges still require more time to replenish their energy compared to gasoline and hybrid vehicles.”
Consumer confidence is also buoyed by favourable policies and extensive public fast-charging networks.
“Greater demand and a more secure supply side helps stabilise resale values there, compared to what we see here in North America,” Johnny T. Beckett, vice president of sales at Canadian multibrand electric car dealer EVNet, told Rest of World.
Uber walked away from buying 5,000 used BluSmart vehicles, while local rivals like Evara Cabs wouldn't touch them because of battery and warranty concerns. BluSmart's fire-sales in the cities of New Delhi and Bengaluru showed exactly how fast EVs can become worthless.
A family car drives modest distances yearly, but Indian fleet vehicles rack up three to four times their mileage, destroying resale value faster, according to Anirudh Damani, managing director at Artha Venture Fund, which backs Uber partner Everest Fleet in India.
“For individual consumers, the resale value is an inconvenience; for fleet operators, it's an existential problem,” Damani told Rest of World. “Their vehicles are financial assets, not lifestyle products. Without a predictable residual value, even a profitable fleet can become unviable once replacement cycles begin.”
Battery-as-a-service models are emerging as a potential lifeline as they give fleet operators the predictable costs and stable values they desperately need, offering a path forward where battery risk no longer threatens entire business models, Damani said.
An April 2025 McKinsey report shows one in five Europeans and just one in 10 U.S. consumers are considering going electric. Fleet operators, though, are making massive bets globally, with companies such as Uber, Bolt, and Lyft pledging full electrification — despite vehicles potentially becoming worthless before the loans are even paid off.
Battery tech is also proving more resilient than expected. Research from Recurrent shows batteries deteriorate just 1%-2% annually, with only 1% of cars built after 2016 needing replacements versus 13% for older EVs. Most of the recent replacements are also covered by warranties.
“The data is helping people have confidence in used EV batteries,” Garberson said. “As confidence rises, so will resale prices.”
On the back of these quantifiable indicators, there's been a rise in certified pre-owned EV programs and state-of-health reports that aid informed decision-making. It's now also easier to keep up with these cars. The pace of innovation that initially scared buyers has slowed, with manufacturers prioritizing longevity over rapid changes, according to EVNet's Beckett, who is also the co-founder of the Electric Vehicle Association of Atlantic Canada.
According to Beckett, 2026 “will be a year of industry and market readjustments to both lower supply and demand”.
Ananya Bhattacharya is a reporter for Rest of World covering South Asia's tech scene. She is based in Mumbai, India.
This article was originally published in Rest of World, which covers technology's impact outside the West.
Source: Scroll
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