While new electric vehicle sales have been declining for several months amid high interest rates and purchase prices, green-energy proponents could draw some comfort from the fact that consumers are turning to the used-EV market in droves. Thanks to a confluence of factors, including falling prices in the secondhand electric-vehicle market along with tax breaks, used EVs are seeing a resurgence in sales.
Buying a used vehicle is the only way most American drivers will be able to own an EV. With the average new electric car costing at least $10,000 more than a similar fossil-fuel vehicle, the majority of drivers in the U.S. simply cannot afford to go electric. Even with government subsidies and tax breaks, the costs involved in buying a new battery electric vehicle (BEV) tend to be so high that most of the U.S. market is locked out of owning a new BEV.
Used electric cars present a great opportunity for ecofriendly drivers to switch to EVs without having to break the bank. As such, the key to a robust used-EV market is affordability. Now that used electric vehicle prices are declining around the country and in other major markets, chiefly due to price cuts initiated by American automaker Tesla, customers are buying up more secondhand electric cars.
After Tesla entered a price discount war with Chinese automakers such as BYD and cut prices across several markets, new EV prices as a whole began to decline. Since secondhand market values are often affected by new EV prices, the discount war also caused prices for used electric cars to drop. Taking advantage of local and federal incentives has made used EVs even more accessible to drivers with limited budgets.
The $4,000 tax credit for new EV purchases is now available for used EVs as well, and it came at the right time. Thanks to legislative changes made last year, customers can now access this tax break at the point of sale instead of buying at full price and waiting months for the tax breaks to kick in. This made accessing the crucial tax break a lot easier and opened up EV ownership to drivers who couldn’t afford to wait until tax season.
According to auto website Cars.com, customer searchers for used electric cars on its dealer listings have increased by 45% since 2023. TrueCar has also noted a 39% increase in electric-vehicle searchers in Q1 2024 compared to Q1 2023, while used-vehicle site Carvana reports a 100% increase in used-electric-vehicle sales since 2023. Drivers are purchasing more used electric cars while the new EV market struggles to attract customers.
The uptick in used EV sales could be a positive signal to electric-vehicle makers such as Lucid Motors (NASDAQ: LCID) regarding the future prospects of BEVs since the future could be uncertain if the used models weren’t attracting more buyers as well.
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