Never Been Better Time To Buy A Used EV — Prices Drop 20.5%! – CleanTechnica

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Been thinking about getting an electric car but not sure when to jump in? Like the majority of Americans, you shopping used cars? Well, if so, it seems your time has come! Used electric car prices were down 20.5% in the second quarter of 2024 compared to the second quarter of 2023! Also, for some context, note that’s compared to a 5.1% average cost drop for hybrids (including plugin hybrids) and an 6.8% average cost drop for conventional gas- or diesel-powered cars. So, yes, used electric cars just got a lot cheaper.

There’s one more key thing to note before I get into explaining why this probably happened. The key second point is that average used electric car prices are now much more similar to average used hybrid and ICE (internal combustion engine) car prices. EVs now have an average used car price of $33,787, compared to hybrids being at $30,416 and 100% fossil-fueled cars being at $27,391. That’s a huge change from the ~$10,000 gap and ~$13,000 gap from a year before.

When you consider how much more you can save by charging with electricity rather than putting expensive gasoline in your car, used electric cars are really now cheaper than used gas cars in many case!

Also consider that the average used EV is going to be significantly newer than the average used ICE car or hybrid, because EVs only started reaching significant sales volumes in the US in recent years. (The average age of used EV is now 2.7 years, whereas the average age of a used car in general (those EVs as well as hybrids and pure fossil vehicles) is 4.5 years. Because of this difference in age, naturally, used EVs have been driven less. The average for all vehicles combined is 52,478 miles, while the average of used EVs is 29,430. Of course, having more than 20,000 fewer miles and being about 2 years younger, electric vehicles are going to cost more! Frankly, the fact that the average pricing is so similar just makes it that much more obvious that now is the time to buy a used EV rather than a used gas car.

This difference in age starts to get us into why used electric car prices have dropped so much. It’s not just one reason. I think easiest is to just put the reasons in a bullet list (and if I’m missing any, add them into the comments below):

1. More new electric cars are eligible for the $7,500 EV tax credit this year, including very popular ones, which immediately drops the price you can get for similar used electric cars.
2. Tesla has had to cut prices in the past year in order to stimulate sales. Lower prices for new cars means lower prices for used cars.
3. Used electric cars are older than ever. That drives down prices.
4. Prices of used cars across the board have gone down as inflation has been tamed and the auto market has cooled.
5. There may be less demand for Teslas than a year ago for … obvious political reasons.
6. Hertz and some others dumped a lot of Teslas and other EVs into the used car market. When you add a lot of supply, basic economics tell us you will lower prices.

Tell me if I’m missing something.

“This downward trend in values marks an abrupt turn in the trajectory of the used EV market, which had a runup in prices with the introduction of competitive products. We seem to have reached a point where used EVs values are succumbing to more mainstream market forces,” Edmunds, which collected the data, notes.

Importantly, for those who want to trade in their EV for a new one, this huge drop in the value of their cars hurts. In fact, it diminishes the number of people who do trade in their EVs for a new one, which leads to less demand for new EVs, which drives down EV prices, which drives down the value of used EVs. Oh my, that’s quite a circle that’s been created!

Coming back to price, Edmunds provides more info on the results for different price ranges:

Average prices for used EVs typically command a premium against the overall used market, but a closer look at the highest share of transactions across different price ranges shows that, similar to the broader industry, the bulk of EV sales fall within the $20,000–$30,000 range.

And yet, while the highest volume of sales in the EV market and overall industry come in the same price range, the EV market features a bit of a long tail for transactions occurring at the higher price points. Transactions over $30,000 account for 51.9% of the used EV market, while that figure drops to 38.1% for the overall used market.

Now, what about the future? What will happen in the next year or so with used EV prices, and used car prices in general? Give me a crystal ball and I’ll tell you. However, the big catalysts will likely revolve around Tesla still (in the USA). There are three potentially big influencers, but none of them are close to a certainty and timing is highly nebulous:

1. Tesla could roll out a new, cheaper, $25,000 or so electric car. However, that seems unlikely until late 2025 at the earliest.
2. Tesla could master “Full Self Driving” (FSD) and the value of Teslas with FSD and robotaxi capability could go up significantly, which could raise used Tesla prices. Again, though, Elon Musk has predicted much faster progress than Tesla has achieved for nearly a decade now, so don’t sell your horses just yet.
3. Tesla could face more serious consumer demand issues than it’s been seeing already. I’ve discussed this at length, so will just direct you here, but the core points for the US market are that a) Elon Musk has been pushing more and more people away from the Tesla brand, especially in the company’s key market of California, and that’s probably been amplified quite a bit recently from Musk endorsing Donald Trump, seemingly donating to his campaign, and interviewing him on X (formerly known as Twitter); b) the market for two mass-market Tesla vehicles and three more niche vehicles may be getting saturated, and sales may continue to drop rather than rise in the US.

We’ll see, but who knows? What we do know is that used electric cars are cheaper than ever, and seem like a great buy. As someone who owns a 5-year-old Tesla Model 3, I can’t believe I’ve already had it for 5 years, and it still looks and performs similar to how it did when I bought it in 2019.