AUTO

A Maturing New EV Market Heralds More Choices for Used Electric Vehicle Buyers

May 7, 2024

Consumers have a growing range of body styles and price points to choose from in the new EV market.
As the new EV market becomes more mature, the used EV market is also growing.
More EVs at lower price points are being leased, which will grow the choices in the used EV market even more.

The new EV market is beginning to look more mature in terms of consumers having a wider range of models to choose from at more price points. As the new EV market matures, the market for a used electric vehicle will mature, as well, at a lagging pace.

A maturing used EV market will grow EV ownership by offering more body styles and price options to match the tastes and needs of a wider variety of consumers.

“This is great news for EV adoption,” Liz Najman, director of market insights at Recurrent, told Electrify News in an interview. “Demographics that previously found EVs inaccessible will suddenly have place to look. [EV ownership] will no longer be a foreign concept.”

Recurrent, which Najman called a “mission-driven company to get more EVs on the road,” has seen a huge increase in online listings for used EVs over the past three years, including listings for used BEVs and used plug-in hybrid options as well.

In April of 2021, Recurrent counted some 11,000 EV listings. By April of 2024, that grew to 33,000, Najman said. The powertrain mix has also evolved. In 2021, 55% were BEVs and 45% were PHEVs. By 2024, BEVs accounted for 73%.

The Used Electric Vehicles For Sale Are Getting Younger

The current EV listings are also newer. In 2021, nearly 30% of used EVs for sale were more than five years old (Tesla’s Model 3 was released in 2017, so those used EVs didn’t include Tesla’s, Najman remarked.)

Today, nearly 30% of the used electric cars for sale are less than two years old, while 45% of the used EV cars are three years old or younger, based on Recurrent’s survey of online listings across the country.

Meanwhile, listings for used gasoline-powered cars are skewing older, with more than half in the second quarter of 2023 more than three years old, Najman said.

The used electric market is also changing and becoming more accessible as models that were likely bought by “regular people” rather than early adopters come into the used mix, she said. That includes the Volkswagen ID.4 and the Mustang Mach-E.

“In summary, the used EV market is more affordable than any time in the past 2.5 years, while the mix of vehicles favors more newer, longer-range models than ever before,” she said.

Rising Electric Vehicle Leasing Will Grow the Selection of Used EVs

According to Experian’s State of the Automotive Finance Market Report: Q4 2023, EVs accounted for 8.6% of all new retail transactions, up from 7.1% in Q4 2022.

Crucially for growing the used all-electric car inventory, the number of those EVs that were leased shot up to 30.7% from just 9.8% at the same time a year ago. Leasing is a key source of newer used vehicles because they generally come back to the dealer in three years or less.

“Leasing can be a great way to drive the accessibility of late model used EVs,” Melinda Zabritski, Experian’s senior director, Automotive Financial Solutions, told Electrify News in an email.

“While most of the used EV market is made up of Tesla models,” she said, “as other makes and models become leasing options, we’re likely going to see a broader range of used EV inventory.”

More Used All-Electric Car Choices Coming

The types of EVs leased indicated there will be a used electric vehicle for every price point in just a few years.

A growing number of mass market EV models are being leased. For example, leasing accounted for 78% of purchases of the used electric SUV Nissan Ariya, 56.8% of Kia EV6 purchases, 74.5% of Volkswagen ID.4 purchases, and 64.0% of Hyundai Ioniq 6 purchases in the fourth quarter of 2023, according to Experian.

On the premium front, 91.1% of BMW iX and 79% of BMW i4s were leased.

“The rise in leasing and new EV registrations will play an important role for the used vehicle market in years to come,” Zabritski said.

The Used Electric Vehicle Tax Credit

As the number of used electric vehicle choices grows to include more lower-priced models, more consumers can take advantage of the used EV tax credit to buy one.

To qualify for the used EV tax credits, an EV must be bought from a licensed dealer for $25,000 or less. The buyer’s adjusted gross income may not exceed certain specified levels. The tax credit is 30% of the sales price to a maximum of $4,000.

Many new EVs are blocked from receiving the $7,500 tax credit for new purchases because of the buyer’s income or where the components were sourced. Meanwhile, if those same cars are leased instead, they can qualify! And more EV leasing will lead to more used EVs.

“The loophole in the Inflation Reduction Act looks less like a loophole and more like an intelligent design” to boost EV adoption, Najman said.

Perhaps. In any case, the maturing used EV market will have many more options for those wanting a used electric vehicle.