Used car market opens door to broader EV adoption

Although some would argue this year has been the great slowdown of EVs, beneath the headlines lies a more nuanced picture of the overall EV market. 

Driving the news: Steady year-over-year sales growth with help from tax credits and an increased supply has led to a modest decline (2.5%) in new EV prices. On the other hand, used EV prices are down 16.6% against this time last year.

What’s happening: Some of the earliest EV adopters are trading in their vehicles for newer models with better tech and longer ranges, creating an influx of supply to the used market. 

Why it matters: A robust pre-owned EV market is key for broader adoption. Most years, Americans buy more than twice as many cars used as new.

Between the lines: On the whole, EVs are still pretty expensive to buy, partly because early EVs targeted the luxury end of the car market and consumers with higher incomes. But that is starting to change. 

By the numbers:

• According to a June report from iSeeCars.com, used EV prices continue to fall below their gas-powered counterparts.

• From May 2023 to May 2024, used EV prices have dropped 29.5%, landing at $28,767 on average. This is over $11,000 less year-over-year.

Behind the drop: After years of big price increases and selling cars over MSRP due to production shortages, dealers are faced with nearly 3,000,000 units of new inventory – much closer to pre-pandemic levels. Now, they have to ramp up incentives to keep volumes healthy. This trickles down to the used car market and causes prices to fall.

What they’re saying: “Some new models are beginning to break through the affordability barrier, said Stephanie Valdez-Streaty, director of industry insights at Cox Automotive. “Price is going to continue to be one of the top barriers for adoption, but the EV premium is shrinking and that’s a good thing,” she said.

• According to online used car retailer Carvana, the distribution of EV buyer incomes is growing in the $50K-$75K and $75K-$100K segments while falling in the >$100K category. 

• "We've seen EVs evolve from a niche category favored by early adopters to a mainstream option considered by consumers of all ages and income levels,” said Emily Knoll, Carvana's Senior Director of Inventory Strategy. 

The bottom line: The popularity of used EVs is rising and with more affordable prices and less income needed to become an adopter, the used EV market is rife with opportunity.

What we’re watching: With so many automakers scrambling to introduce cheaper EVs, it’ll be interesting to see how low EV prices can go.

Go deeper: Stabilizing prices and tax credits fuel used EV affordability

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