Used Electric Vehicles Selling Fast, but Many See Sharp Declines in Value: Report

The expiration of a federal tax credit for new electric vehicles (EVs) has led to a sharp decline in sales of new EVs, but it has been a boon to the used-EV market.

Used electric vehicles that are at least 3 years old sold faster than any other type of powertrain in the third quarter, automobile research and pricing platform Edmunds stated on Nov. 11 in its quarterly used vehicle market report. Fully electric vehicles turned over at an average of 34 days, beating out hybrid-electric models (40 days), diesel-powered trucks and cars (41 days), and traditional gasoline-powered automobiles (43 days).

Electric vehicles typically had lower mileage than other 3-year-old vehicles, Edmunds noted. EVs averaged 35,661 miles, while internal combustion vehicles were closer to 40,000 miles. EVs also sold for roughly $1,100 less at an average of just below $30,000 per vehicle.

The Sept. 30 expiration of a $7,500 tax credit for new EVs likely directed more shoppers toward the used-EV market in search of better deals, according to Ivan Drury, director of insights at Edmunds.

“Each opportunity to acquire a used EV presents a chance to emphasize its strong value proposition, offering advanced technology and performance at prices far below new or even original MSRPs,” Drury wrote, referring to the manufacturer’s suggested retail price.

EV sales surged as buyers scrambled to take advantage of the credit, and they plummeted by more than 60 percent in October among several major EV manufacturers after the credit expired.

Tesla’s Model S and Model 3 were the fastest-selling used EVs in the third quarter, turning over in 21.5 and 24 days, respectively. Consumers scored the best deals on both by buying used 3-year-old vehicles. Values dropped more than $70,000 on the Model S and $32,500 on the Model 3, Edmunds reported.

The Austin, Texas-based EV manufacturer’s Model Y was the fourth-fastest-selling EV in the quarter behind the Cadillac CT5 at 26.3 days, with a more than $41,000 depreciation in price from the original manufacturer’s suggested retail price.

“In many ways, used EV buyers are embracing technology that’s just one generation old, while new EV buyers still face the risk of paying premium prices for models that evolve rapidly year over year,” Drury wrote.

The market for used EVs remains compressed, with fully electric vehicles accounting for just 1.6 percent of all 3-year-old used-vehicle inventory in the third quarter, Edmunds said—a primary reason for their quick turnaround on used-car lots.

While half of the fastest-selling used cars were electrified, Edmunds noted, the combustion-powered vehicles that made the list were imported brands known for their reliability, such as Lexus, Toyota, Honda, Hyundai, and Kia.