Is 2024 the Best Time to Buy a Used EV?
Increasing competition with new electric vehicles, federal tax credits, and other factors have made used EVs more commonly available and cheaper.
Volvo
Have you been wanting a new battery electric vehicle (BEV) but are having a hard time finding prices within your budget?
Several factors have recently combined to make purchasing used EVs an attractive alternative to buying new ones. With more than 40 models on sale, competition has increased the availability of new EVs. This has triggered price reductions, most notably by Tesla, which cut prices several times in 2023 and again this year.
Drops in new-car prices often reduce the resale value of the same models already in owners' hands. As of April 2024, it was possible for used-EV buyers to find deals for less than $25,000, including for the popular Tesla Model 3. That is the threshold for a used EV to qualify for a federal tax credit of up to $4,000, which could drive the price of a used recent Model 3 or other EVs below $20,000.
Used-EV Prices Have Dropped Significantly
In April 2024, EV analysis company Recurrent, which tracks used BEVs and plug-in hybrid (PHEV) prices and the battery health of owners' cars, noted that the average price of popular EV models was just under $24,000, a 27% drop from the same time in 2023. Prices of used Teslas two years and older have dropped by 27% to 32%, depending on the model.
"Price drops on new EVs have certainly pushed down used-EV values," said Ed Kim, president and chief analyst of automotive market research firm AutoPacific. "If you bought a new EV in the past few years or even months, you're probably not too happy with resale values now. But if you're in the market for a used one, there are some really good deals available."
And the drops keep coming. Don't see a price you like? It might help to wait a month or two. Kia recently announced a $7,500 reduction for its new 2024 EV9 three-row SUV, bringing the starting price to around $49,000. That is just $2,000 more than the average internal-combustion vehicle price and $6,000 less than the recent average new EV price.
Kia's discount takes the place of the maximum new EV federal tax credit, for which the EV9 is not eligible, and if you recently bought a Kia EV9, this new discount may reduce its resale value.
Further EV Price Cuts Are Possible
A record 1.2 million EVs were sold in the U.S. in 2023, with a 40% jump in the fourth quarter compared to 2022. Market analyst firm Cox Automotive noted a 9% decrease in the average transaction price for a new EV in the first quarter of 2024 compared to that period in 2023. Tesla's average transaction price dropped by 13.3% thanks to its aggressive price cuts. You can expect new EV price reductions as market competition continues to heat up.
Notably, while the EV market has been mostly a Tesla show until recently, the market has evolved as more models enter the fray. Tesla's share of the EV market in the first three months of 2024 was just over 51%, down from nearly 62% a year earlier.
Kia
More New EVs Means More Used EVs
A continuing trend of lower new EV prices should help increase the number of affordable used EVs, according to Recurrent, which projects a 40% jump in used-EV sales over 2023. Its data from the fourth quarter of 2023 showed that used EVs outnumbered sales of every new EV except the Tesla Model Y and Model 3.
"More new products, more incentives, more inventory, more leasing, and more infrastructure will drive EV sales higher this year," said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive.
The Hertz Factor
Kim noted that another factor in the decline of Tesla's values is rental-car sales, specifically Hertz's move in early 2024 to sell 20,000 cars from its fleet of EVs, most of which were Teslas. Still, Hertz's fleet includes EVs from Chevrolet, Volkswagen, Kia, and Polestar.
On its website, Hertz touted used Tesla Model 3s available for less than $25,000. Hertz cited dropping resale values as a key reason for the selloff. The company must book that as an accounting loss before selling its cars.
Most of the bargain Teslas were sold by late April this year, though the Hertz website indicated about 1,100 late-model Chevrolet Bolts being offered for less than $19,000.
How to Qualify for a $4,000 Tax Credit
If you find a used EV at least two years old and priced at $25,000 or less at a licensed dealer, you could be eligible for a federal clean-vehicle tax credit. The credit is 30% of the car's price, up to $4,000.
To be eligible for the tax credit, buyers can earn a maximum modified adjusted gross income of $150,000 for joint tax returns, $112,500 for a head of household, and $75,000 for individuals. The buyer can apply for the credit at the time of purchase by transferring it to the dealer or wait to claim it when filing the tax return for that year.
Shoppers should inquire with the dealer in advance to ensure they understand the procedure to register with the IRS. You cannot claim the tax credit if you buy from a private seller.
The tax credit can be applied to BEVs and PHEVs. Unlike the new-EV tax credit, the used-EV tax credit has no restrictions on where the vehicle was built. However, there is a potentially significant sticking point: If an EV or PHEV has already been resold once as a used car after August 16, 2022, it is ineligible for the credit.
When considering a used EV, make sure you verify its sale history if you think it might qualify for a credit.
Written by humans.
Edited by humans.
Jim KoscsJim Koscs has been writing about cars for more than 30 years, his byline appearing in national enthusiast and trade publications, newspapers, and websites. He covers a broad spectrum of topics in automotive business, culture, collecting, design, history, racing, and technology. The "car thing" goes way back for Jim. At the 1968 New York Auto Show, he snuck away from his father to get a better look at a Rolls-Royce... from underneath it, to see if it had dual exhausts. (It didn't.)
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