Are Used EVs Decreasing in Price?
If you’re looking for proof that electric cars are becoming mainstream, you only need to look at the evolution of the used EV market. Until now, the market for electric cars has been quite different from conventional vehicles: the technology is new, and the market has been driven by the introduction and increasing sales of new vehicles. In 2023, however, the used electric car market has evolved, with pre-owned EVs far exceeding the sales of every new EV model other than the Tesla Model Y and Model 3.
Why does that indicate that EVs are becoming normal? Because, while new cars get all the headlines, the “normal” car market is driven by used vehicles. In fact, every year in the U.S., three times as many used vehicles are sold compared to new vehicles. With new EV sales in the U.S. estimated to reach over one million units by the end of 2023, there’s been a commensurate rise in used EV sales – with many drivers purchasing their first EV as a used car, and many EVs also being traded in against newer models.
Increased EV Inventories with Newer Cars
Indeed, data from EV industry watcher Recurrent shows that availability of used EVs is better than it’s ever been. In April 2021, for example, there were 11,000 used electric cars in dealer inventories across the U.S.; today, that number is over 33,000. Plus, that inventory is fresh: while in April 2021, 30 percent of inventory was more than five years old, in 2023, almost 45 percent of used EV inventory is three years old or newer; 30 percent of inventory is in fact less than two years old. The used gasoline vehicle market actually skews older, with over half of used car sales in the second quarter of this year more than three years old.
The mix of vehicles has changed, as well. Today’s used EVs are far more advanced than the early models that sat on used-car lots a couple of years ago. They have longer range, more appealing technology features, and come in a wider variety of body styles and configurations. You’re no longer just looking at large Tesla Model S sedans and small Nissan Leaf city cars – there are electric crossovers, SUVs, and even pickup trucks to suit every need.
Average Used EV Prices Drop
Even better news for those considering a switch to electric is that affordability has significantly improved; in fact, Recurrent says the used EV market is more affordable now than anytime in the past two and a half years. The average price of a used electric car is now $27,683 – the lowest Recurrent has observed since early 2021, and down a massive 32 percent compared to this time last year.
That’s largely been driven by Tesla’s massive price cuts on new vehicles, which have had the effect of reducing prices for used cars as well. In fact, the average price of a used Tesla Model 3 – one of the top-selling EVs, new or used – has fallen over $9,000 since 2021. And the Chevrolet Bolt, the most affordable EV, has dropped by about $1,500 since 2021.
New Federal Used EV Incentive
What’s important about these dropping prices is that the core of the used electric car market is now hovering quite close to the $25,000 mark – a magic number, because of a new federal tax incentive available for used electric cars. Used EVs under $25,000 are eligible for up to $4,000 in federal incentives, presuming that buyers meet certain criteria. In effect, the new incentive brings the actual price of a used EV down to just over $20,000, bringing electric car ownership within reach of a huge new demographic.
Starting in 2024, claiming the used vehicle tax incentive will also get easier. Instead of applying for a rebate at tax time, electric car customers can simply access the incentive as a reduction on the selling price of the vehicle, presuming the sale happens at a car dealer registered with the IRS to share information. The dealer applies for the incentive on the customer’s behalf, passes on the savings, and gets reimbursed by the IRS almost immediately.