The demand for used electric vehicles (EVs) in America is skyrocketing, with sales on track to surpass 100,000 units in the second quarter of the year. This surge in the secondhand EV market represents a 27% increase from the previous quarter and a 45% jump from the same period last year, according to data from Cox Automotive.
The reasons behind this remarkable growth are multifaceted. One contributing factor is the increasing availability of used EVs, driven by the influx of off-lease vehicles hitting the market. The “leasing loophole” in the federal EV tax credit has led to a surge in EV leasing since 2022, resulting in a growing supply of high-quality, affordable pre-owned EVs.
Moreover, the secondhand EV market now offers a more diverse selection of vehicles, including newer models with improved range and features. Previously, budget-conscious buyers were limited to older, low-range EVs like the Nissan Leaf and Chevrolet Bolt. However, they can now find deals on popular models like the Tesla Model 3 and Model Y for under $25,000.
Despite concerns about the impact of federal policies on the EV market, the used EV segment continues to thrive due to its affordability. While the average price of a new EV hovers around $58,000, used EVs are priced more competitively, with the average 1-to-5-year-old EV listed for around $36,000 in May. Some models, like the Model 3, are even more affordable, with an average price of $23,160.
The affordability of used EVs, coupled with lower maintenance costs and potential tax incentives, makes them an attractive option for budget-conscious consumers. As new EV sales face challenges, such as a projected 6% year-on-year decline in the current quarter, the used EV market is expected to continue its growth trajectory.
Looking ahead, the future of the EV market remains uncertain, with potential policy changes threatening to impact the industry. However, the influx of off-lease EVs expected to hit the market in the coming years is likely to sustain the momentum of the used EV segment. Despite the challenges facing the EV industry, the thriving used EV market presents a bright spot in an otherwise uncertain landscape.