Let’s delve into the complexities surrounding the recent decline in used electric vehicle (EV) prices. While some may view this trend as a cause for concern, there are several factors at play that warrant a closer examination.
1. The Context Matters
The headline-grabbing term “cratering” conjures images of a market collapse, but let’s put things in perspective. Yes, used EV prices have decreased, but it’s essential to understand the broader context. Here’s why:
- Record Adoption: In 2023, EVs accounted for a remarkable 7.6% of the U.S. vehicle market¹. As more EVs hit the roads, the sheer volume of used EVs available naturally impacts prices.
- Normalizing from Peaks: New EV prices fell nearly 20% from their peak of $66,390 in June 2022 due to inventory growth⁴. These price adjustments represent a return to more sustainable levels after a surge driven by geopolitical factors (remember the Ukraine gas crisis?).
2. Tesla’s Influence
Tesla, a major player in the EV market, has been strategically adjusting its prices. By doing so, they’ve lowered the average cost of EVs. Other manufacturers, like General Motors, have also contributed to the decline by offering competitively priced models (e.g., the Chevrolet Bolt EV at around $30,000)⁴.
3. Incentives and Tax Credits
- Manufacturer Price Cuts: Ford Motor slashed $10,000 off the price of its F-150 Lightning EV pickup truck, making it more accessible to buyers⁴.
- Tax Credits: Companies like Hyundai and Kia adjusted their prices to qualify for the $7,500 EV tax credit under the Inflation Reduction Act⁴.
4. The Used EV Market
- Price Drops: Used EV prices fell by almost 30% between June 2022 and June 2023, according to iSeeCars⁴. However, this correction aligns with market dynamics.
- Cautious Approach: While prices have dropped, used EVs still command relatively high costs. Buyers should weigh the risks associated with purchasing a used EV.
5. The Future Outlook
- Growing Competition: More manufacturers are entering the EV space, leading to increased competition. This healthy rivalry benefits consumers.
- Infrastructure and Range: As charging infrastructure improves and EV ranges extend, consumer confidence will rise, further stabilizing prices.
In summary, the used EV market isn’t “cratering”; it’s recalibrating. Prices are adjusting to reflect a maturing industry. So, if you’re considering a used EV, do your due diligence, explore incentives, and embrace the exciting evolution of electric mobility. 🚗⚡
¹: Why are used EV prices cratering right now? It’s complicated
⁴: New, used EV prices have dropped, but don’t rush to buy, analyst says
(1) Why are used EV prices cratering right now? It’s complicated. https://www.msn.com/en-us/autos/news/why-are-used-ev-prices-cratering-right-now-it-s-complicated/ar-BB1hXfpb.
(2) New, used EV prices have dropped, but don’t rush to buy, analyst says. https://www.cnbc.com/2023/07/26/new-and-used-ev-prices-have-dropped-but-dont-rush-to-buy.html.
(3) Polestar’s CEO just hinted at a looming problem in the EV market: Tanking used values. https://www.msn.com/en-us/autos/news/polestars-ceo-just-hinted-at-a-looming-problem-in-the-ev-market-tanking-used-values/ar-BB1hS2rx.
(4) Wholesale Used-Vehicle Prices Flat in January. https://www.automotive-fleet.com/10215154/wholesale-used-vehicle-prices-flat-in-january.
(5) Used Electric Car Prices & Market Report — Q1 2024. https://www.recurrentauto.com/research/used-electric-vehicle-buying-report.
(6) Used EV Prices Soared 5X More Than Gas Car Prices Year-Over-Year. https://insideevs.com/news/606244/used-electric-car-prices-soar-54-percent-over-year/.
