A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia
Throughout this article, an alternative depreciation method for electric vehicles (EVs) is presented, addressing the challenge of information asymmetry—a common issue in secondary markets. The proposed method is contrasted with traditional models, such as the Straight-Line Method (SLM), the Declinin...
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| Language: | English |
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MDPI AG
2024-11-01
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| Series: | World Electric Vehicle Journal |
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| Online Access: | https://www.mdpi.com/2032-6653/15/11/511 |
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| author | Stella Domínguez Samuel Pedreros David Delgadillo John Anzola |
| author_facet | Stella Domínguez Samuel Pedreros David Delgadillo John Anzola |
| author_sort | Stella Domínguez |
| collection | DOAJ |
| description | Throughout this article, an alternative depreciation method for electric vehicles (EVs) is presented, addressing the challenge of information asymmetry—a common issue in secondary markets. The proposed method is contrasted with traditional models, such as the Straight-Line Method (SLM), the Declining Balance Method, and the Sum-of-Years Digits (SYD) method, as these classic approaches fail to adequately consider key factors such as mileage and secondary aspects like battery degradation and rapid technological obsolescence, which critically impact the residual value of used EVs. The presented approach employs an adverse selection model that incorporates buyers’ and sellers’ perceptions of vehicle quality from the information recorded on e-commerce platforms, improving the depreciation estimation. The results show that the proposed method offers greater accuracy by leveraging asymmetric information extracted from web portals. Specifically, the method identifies a characteristic intersection point, marking the moment when the model aligns most closely with the data obtained through traditional methods in terms of precision. The analysis through the density of price estimations by vehicle model year indicates that, beyond 1.8 months, the proposed model provides more reliable results than traditional methods. The proposed model allows buyers to identify undervalued assets and sellers to obtain a fair market value, mitigating the risks associated with adverse selection, reducing uncertainty, and increasing market transparency and trust. It fosters equitable pricing between buyers and sellers by addressing the implications of adverse selection, where sellers—possessing more information about the vehicle’s condition than buyers—can dominate market transactions. This model restores balance by ensuring fairer valuation based on vehicle usage, primarily addressing the lack of critical data available on e-commerce platforms, such as battery certifications, among others. |
| format | Article |
| id | doaj-art-f8312e8c464e4d6bbcf655dfc9941d23 |
| institution | DOAJ |
| issn | 2032-6653 |
| language | English |
| publishDate | 2024-11-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | World Electric Vehicle Journal |
| spelling | doaj-art-f8312e8c464e4d6bbcf655dfc9941d232025-08-20T02:48:07ZengMDPI AGWorld Electric Vehicle Journal2032-66532024-11-01151151110.3390/wevj15110511A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in ColombiaStella Domínguez0Samuel Pedreros1David Delgadillo2John Anzola3Department of Advertising and Marketing, Fundación Universitaria Los Libertadores, Bogotá 110231, ColombiaDepartment of Mechatronic Engineering, Fundación Universitaria Los Libertadores, Bogotá 110231, ColombiaMaster of Engineering, Fundación Universitaria Los Libertadores, Bogotá 110231, ColombiaDepartment of Electronic Engineering, Fundación Universitaria Los Libertadores, Bogotá 110231, ColombiaThroughout this article, an alternative depreciation method for electric vehicles (EVs) is presented, addressing the challenge of information asymmetry—a common issue in secondary markets. The proposed method is contrasted with traditional models, such as the Straight-Line Method (SLM), the Declining Balance Method, and the Sum-of-Years Digits (SYD) method, as these classic approaches fail to adequately consider key factors such as mileage and secondary aspects like battery degradation and rapid technological obsolescence, which critically impact the residual value of used EVs. The presented approach employs an adverse selection model that incorporates buyers’ and sellers’ perceptions of vehicle quality from the information recorded on e-commerce platforms, improving the depreciation estimation. The results show that the proposed method offers greater accuracy by leveraging asymmetric information extracted from web portals. Specifically, the method identifies a characteristic intersection point, marking the moment when the model aligns most closely with the data obtained through traditional methods in terms of precision. The analysis through the density of price estimations by vehicle model year indicates that, beyond 1.8 months, the proposed model provides more reliable results than traditional methods. The proposed model allows buyers to identify undervalued assets and sellers to obtain a fair market value, mitigating the risks associated with adverse selection, reducing uncertainty, and increasing market transparency and trust. It fosters equitable pricing between buyers and sellers by addressing the implications of adverse selection, where sellers—possessing more information about the vehicle’s condition than buyers—can dominate market transactions. This model restores balance by ensuring fairer valuation based on vehicle usage, primarily addressing the lack of critical data available on e-commerce platforms, such as battery certifications, among others.https://www.mdpi.com/2032-6653/15/11/511electric vehicle depreciationinformation asymmetryadverse selectionoperational leasingsecondary markets |
| spellingShingle | Stella Domínguez Samuel Pedreros David Delgadillo John Anzola A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia World Electric Vehicle Journal electric vehicle depreciation information asymmetry adverse selection operational leasing secondary markets |
| title | A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia |
| title_full | A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia |
| title_fullStr | A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia |
| title_full_unstemmed | A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia |
| title_short | A Depreciation Method Based on Perceived Information Asymmetry in the Market for Electric Vehicles in Colombia |
| title_sort | depreciation method based on perceived information asymmetry in the market for electric vehicles in colombia |
| topic | electric vehicle depreciation information asymmetry adverse selection operational leasing secondary markets |
| url | https://www.mdpi.com/2032-6653/15/11/511 |
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