Experts weigh in on predictions for the 2025 used EV market

Electric vehicles (EVs) have grown more popular over the last year, but questions about their long-term profitability remain.

Driving the news: During the 2024 Used Car Week, panelists from across the industry sat down to discuss the last 12 months of EV remarketing and where trends are headed for 2025 (panel discussion led by Elena Ciccotelli, Host and Producer of “The EVs for Everyone Podcast”). Here are the takeaways from their discussion.

Normalization of EVs: While EVs were considered a niche product, most buyers today are willing to consider an electric car, a trend reflected in the supply of used EVs.

• ‘If you really looked at the supply and demand economics, used EV supply is now averaging 45–47 days versus the average for used ICE cars at 45 days,” remarked Scott Case, CEO of Recurrent.

• Prices on the preowned side have also stabilized since last year when they initially went into freefall due to aggressive discounting from Tesla.

• Their wide acceptance and lack of volatility have encouraged the industry to embrace used EVs as a normal part of the business.

Affordability opening new markets: Affordability used to be a major roadblock to would-be EV buyers. Today, price points are much more reasonable on the preowned side, opening EVs up to a broader category of consumers.

• “And that’s not just true on the consumer-buying side; it’s also true for dealers,” commented Jimmy Douglas, Founder and CEO of EV wholesale platform Plug. “Dealers who were otherwise not even participating in this are suddenly finding an opportunity to present their customers with a very affordable option that happens to be subsidized by the government.”

• While the overall number of used EV dealers remains small, Jimmy estimates the total has risen by 100 over the last year.

EV profitability hinges on velocity: With the likely removal of the EV tax credit under the next presidential administration, dealers must now focus on scaling their used EV business quickly in order to maintain profits.

• Dealers who focus on EVs are far more aggressive in keeping days-to-turn as low as possible, more so than with internal combustion engine (ICE) vehicles. Implementing a fast reconditioning process that takes the unique needs of electric cars into consideration is especially important.

• At the end of the day, ‘If you can acquire a vehicle for a good price and sell it quickly, there’s still money to be made,” remarks Jeff Miller, VP of Strategic Partnerships at Carvana.

Shifting to EV-specific service models: Electric cars present their own unique challenges that require specific solutions, forcing dealers to get creative.

• On the one hand, EV service can be easier since there are fewer moving parts and no engine.

• At the same time, the parts market for cars like the Model is more difficult to navigate due to a lack of support from Tesla. Although other automakers are making an effort to boost the overall supply of EV parts, servicing Teslas is likely to be challenging for dealers.

• Used EV buyers also have special needs that traditional ICE customers may not have. For instance, consumers often don’t realize they have to clear out the previous owner’s PII (Personally Identifiable Information) from the car’s system.

• “There’s also an educational component around charging,” says Jeff Miller. “For example, understanding that you may need a Level 2 charger in your garage. A lot of people get into an EV without really being educated on what it takes to travel with one.”

Consumer demographics are evolving: New trends are emerging in terms of EV buyers.

• While wealthy tech enthusiasts were the main demographic for electric cars for years, EVs have become more mainstream.

• Millennials and Gen Z are the main drivers of EV adoption today, presenting new opportunities for dealers to break into these markets. Younger consumers are also more comfortable with e-commerce, creating opportunities for retailers to leverage data and provide an excellent online experience.

Predictions for 2025: While the EV market is seeing growth and stability, next year will bring some changes to the market.

• Tax credits are expected to disappear, removing a key incentive that has helped fuel EV growth on both the new and used side. However, as Scott Case notes, “Deadlines always motivate buyers.” With just weeks left to take advantage of the $3,750 or $7,500 credit, EV dealers are likely to a see a surge in demand as consumers rush to showrooms.

• But even without tax credits, electric cars are expected to remain a critical force in the auto market. Analysts project a five-times increase in used EV volumes alone over the next four years, regardless of government policy.

• For the next 12 months, dealers can expect to see the supply of used EVs continue to grow, forcing prices lower and attracting younger buyers. Dealer strategies will also continue to evolve as best practices come to light for this emerging market.

Conclusion: The end of tax credits may lead some to think that the days of EVs are numbered, but the data suggests that electric cars are here to stay. In fact, the used EV market is poised for a transformative year as affordability, consumer demand, and dealer adaptation redefine the landscape. Preparing for these trends will be essential for any retailer looking to stay competitive.

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