A hybrid electric vehicle (HEV)—or battery electric vehicle (BEV) for that matter—is basically more expensive to produce than the internal-combustion engine (ICE) model. The biggest cost in electrified vehicles is the battery, which, according to Statista, accounts for around 28% of the total cost of a large electric vehicle. This has, however, been reduced from about 49% in 2016.

In order to increase driving range, the most immediate recourse is to increase battery size. Unfortunately, this increases the weight of the car, thus affecting performance. And it also significantly increases the price of the vehicle. Conversely, it can be argued that the way to reduce prices of EVs is to reduce the size of the battery, but it will increase range anxiety. How you use the vehicle—short- or long-range driving—will be an important consideration in your purchase decision. In the case of HEVs, the size of the battery is more optimally designed because it is a self-charging technology that does not depend on battery size to increase distance. It focuses on operating efficiency and does not result in range anxiety when driving.

In my understanding, auto engineers—at least in my experience with Toyota—design the electric battery to match the life of the vehicle. In fact, I recently saw a testimonial from an associate of a Toyota dealer in Canada who claims that in his 16 years working with the dealership, he has never seen the battery of a Toyota HEV replaced. The one time they had to was because the owner tried to modify the battery. Of course, there are preconceived notions about the life of the battery being around 10 years. While some will have surely experienced this, most have gone further without any replacement.

It must be remembered that, like fuel efficiency in the case of ICE vehicles, how far you go on battery power is highly impacted by driving habits, terrain, and maintenance. These also affect the wear and tear of the battery. An early study of Tesla batteries done by high-tech systems scientist Maarten Steinbuch (updated in 2020) claims that fast battery degradation of 5% is experienced in the first 40,000km of usage followed by an average slow degradation of 1% every 40,000km up to 320,000km. At an average driving mileage of 20,000km per year, the study covers about 16 years without full degradation of the battery.

The fact that car manufacturers now offer eight-year warranties on batteries—almost three times longer than the vehicle warranty itself—is further testament to the confidence of the makers in the durability of the battery. Toyota HEVs are now in their fourth generation, and the technology of both the key hardware components (motor, inverter, and battery) as well as the operating system that manages the hybrid performance has advanced significantly. Toyota has sold over 22.5 million electrified vehicles over the last 25 years, resulting in equivalent carbon-dioxide-emission reductions by approximately 7.5 million BEVs. This on-the-road experience using actual driving performance has been harnessed to improve the efficiency of Toyota electrified vehicles, including reducing costs.

HEVs have proven to hold their value quite well over time. The wear and tear on the engine and the drivetrain have been reduced due to the hybrid engineering. While some motorists may focus on the cost of battery replacement over a period of time, it can be compared to worrying about getting a new head gasket, a ring job or, in the case of extreme use, an engine overhaul that can cost as much as P100,000 or even a new transmission for a 10-year-old ICE. The fact that HEVs are widely used as taxis in cities like Japan, New York or London is also testament to their durability.

In the case of BEVs, the case becomes even more compelling because they have significantly fewer parts than the 30,000+ that ICEs are made with. For one, there is no more engine. More concretely, a Forbes magazine article by Tom Raftery cites that an ICE drivetrain has about 2,000+ parts versus 20 in an EV. As long as cars (EVs or ICEs) are properly used and maintained, we can rest assured that our cars can hold up very well over time.

Batteries are less consumable than they are depreciable—they are meant to last the life of the car

And then, of course, there is the cost of batteries. An article by Hannah Ritchie for Our World in Data in 2021 claims that prices of lithium-ion battery cells per kilowatt-hour (kWh) have dropped from US$7,523 in 1991 to US$181 in 2018. To put this in context, the author cited the 40kWh battery of the Nissan Leaf that cost US$7,300 in 2018, but which would have cost US$300,000 back in 1991. A Prius owner I know bought his car in 2011, and was told that the battery replacement would cost P700,000. In 2021, he replaced the battery at a cost of P350,000. Over time, with the increase in EV production and sales as well as reduction in production costs, prices of batteries can be expected to drop even more. Not to mention all the newer battery technologies being developed, including solid-state batteries.

So, how do all of these weigh on the resale value of EVs? Given a normal level of use of the car and a reasonable maintenance regimen, the prospective impact of battery replacement on a resale price should not be significant, if any. Batteries are less consumable than they are depreciable—they are meant to last the life of the car. As such, they should not be an extraordinary factor in determining the value of a pre-owned vehicle. The battery is depreciated almost like every other part of the car.

A quick search of resale values in the United States does not show any remarkable difference between the resale values of ICEs and HEVs. I saw a real-world quote on an almost four-year-old RAV4 HEV with 48,000km mileage by Carvana back in August 2023. The transaction price for the brand-new vehicle was US$38,000, and the quote for resale was US$32,830—a 13.6% depreciation. Quite reasonable, really, even if we factor in the auto supply chain disruptions that elevated pre-owned car prices until last year.

If you plan to hold on to your hybrid car for 10 years prior to reselling it, maybe the next owner will not be as concerned about the battery replacement as he would be about your use of and care for the car. He might benefit from the expected further reduction in battery prices, too. The replacement battery for the Corolla Cross HEV is P194,203 today. The Camry HEV battery costs P218,907. Perhaps, in 10 years’ time, this might halve again.

Should we worry about the resale value of HEVs? Not more than we should for an ICE, I think.