The decline in new EV sales in the first quarter of 2026 due to the end of EV tax credits and other pro-electrification regulations has been a significant challenge for the industry. However, amidst this downturn, there is a silver lining: the used EV market is experiencing a boom.
According to data from Cox Automotive, approximately 213,000 new EVs were sold in the first three months of the year, representing a 28% decrease year over year and a 9% decline from the previous quarter. The market share of EVs in Q1 was estimated to be 5.8%, matching the share from Q4 of 2025. This decline in market share is attributed to the rush of consumers to purchase EVs before the tax credit expired in Q3 of the previous year.
Stephanie Valdez Streaty, Cox’s director of industry insights, highlighted that the market is currently in a state of transition. As the pull-forward effect from the tax credit expiration diminishes, the market share of EVs is expected to stabilize. The future trajectory of the market will depend on consumer demand for EVs, the production volumes of car manufacturers, and their commitment to promoting EVs over traditional powertrains.
Despite the challenges faced by the new EV market, Tesla emerged as a winner in Q1, reclaiming over 50% of the EV market share. Additionally, Tesla maintained a 3.3% share of the overall car market, consistent with the previous year. The premium EV segment has fared better than other EVs, with EVs accounting for 26.4% of premium vehicle sales in the first quarter of the year, only a five-percentage point decrease from the previous year.
Looking ahead, the introduction of high-quality EV models like the Chevy Bolt and BMW iX3 is expected to boost sales in the coming months. However, potential cancellations of EV orders could dampen this positive trajectory. As the industry adapts to the changing landscape of EV incentives and regulations, the used EV market presents a promising opportunity for consumers looking to make the switch to electric vehicles. The electric vehicle (EV) market has seen a significant shift in recent times, with new car sales experiencing a sharp decline while the used EV market is thriving. According to recent data, share in the mass market for new EVs has been cut in half, dropping to 1.9% from 4%. However, the story is quite different when it comes to the secondhand side of the EV market.
The used EV market has been performing exceptionally well, with sales peaking in Q3 as consumers anticipated the end of tax credits. Although used EV sales did not drop as drastically as new EV sales did, the market is already showing signs of growth. In Q1, Americans purchased 93,500 used EVs, marking a 17% increase from Q4 and nearly 12% from the first quarter of 2025. The market share for used EVs reached approximately 2.1%, highlighting the increasing demand for pre-owned electric vehicles.
Valdez Streaty, an industry expert, noted that the trajectory of the used EV market is particularly impressive due to the broader variety of models available. In the past, budget-conscious buyers were limited to a few options like Chevy Bolts, Nissan Leaf hatchbacks, and Tesla Model 3s. However, the selection has expanded to include discounted BMWs, long-range Hyundais, and more, offering consumers a wider range of choices.
Furthermore, prices in the used EV market have become more attractive than ever. According to Cox, 44% of used EV transactions in February were below $25,000, making electric vehicles a more cost-effective option compared to traditional combustion vehicles. Research from Recurrent revealed that the average used EV in the $20,000 to $30,000 price range is a 2022 model with approximately 33,000 miles, outperforming combustion vehicles in the same price bracket.
The supply of used EVs is expected to increase further with the influx of off-lease EVs entering the market. As lease returns from the Inflation Reduction Act’s “leasing loophole” begin to reappear at dealerships, Cox projects a steady rise in the number of lease returns per month, with around 20% of these vehicles being electric.
High gas prices are also driving more demand for used EVs, as consumers seek more cost-effective and environmentally friendly transportation options. With the growing availability of affordable and high-quality used EVs, the market is poised for continued expansion in the coming years.