If you’re in the market for an electric vehicle, the time might be right to consider a used one.
The high cost of electric vehicles has long dissuaded many people from buying one. Last year, for example, electric cars and trucks were so popular and supply so limited that waiting lists were common. And some lucky individuals found they could sell their ride for more than they paid for it.
But over the past year, prices of used electric vehicles have fallen significantly. In addition, climate legislation passed in 2022 includes a tax credit to encourage more people to buy used electric cars and trucks.
Auto inflation has eased
Used cars as a whole are about 7% less expensive than they were a year ago, according to data from the Bureau of Labor Statistics. But used battery-powered models are 28% less expensive than a year ago, according to Recurrent, a research firm that specializes in the used electric vehicle market.
Shortages of new cars during the pandemic made new and used cars more expensive, as strong demand for new vehicles spilled over into the used market. Now, supply chains and inventories have improved, and new electric vehicles — and new cars generally — have become more available.
Tesla, which sells most new electric cars, has cut prices several times this year to attract buyers, forcing other automakers to lower prices and offer promotions. Those cuts have helped to push down used car prices.
Some analysts think used electric car prices could fall further, though perhaps not as fast. Higher interest rates and a strong supply of new vehicles ought to continue driving prices down, according to JD Power, a market research firm.
Are electric cars a bad investment?
Most cars depreciate over time. That said, electric cars and trucks are holding their value better today than they did before the pandemic. That’s because there are more places to charge these cars and people have become more familiar with them, said David Paris, director of market intelligence at JD Power Valuation Services.
If you bought, say, a used BMW i3 in 2019, Paris said, it retained only around 30% of the manufacturer’s suggested retail prices after three years. But now the i3 retains more than 50% of its value, suggesting that buyers have fewer concerns about the cars and specifically the health of their batteries, the most expensive part of those vehicles.
Liz Najman, a researcher at Recurrent, said most used electric cars were still new enough that their batteries should be covered under warranty. “Most used EVs in the country have at least an eight-year, 100,000-mile warranty on their battery,” she said.
You should still check the health of a car’s battery before buying because replacing it can be expensive. Recurrent provides reports on the health of a car’s battery, and apps such as Leaf Spy and MyGreenVolt allow car owners to monitor their batteries, depending on the model.
You might be eligible for a tax credit
The Inflation Reduction Act, President Joe Biden’s climate bill, grants a tax credit of up to $4,000 for buying used electric vehicles that cost no more than $25,000.
The credit is available to individuals who earn up to $75,000 a year and couples who make $150,000 or less. According to Recurrent, about 27% of the used electric car inventory is eligible for the credit, up from 17% last year.
To qualify, a used vehicle has to be at least 2 years old. Buyers cannot claim the credit more than once every three years. But, unlike with the tax credits for new vehicles, there are no restrictions on where a used electric vehicle is assembled or where the materials in its batteries come from.
More options are available
Before the pandemic, some of the most popular electric vehicles had been on the road for only a few years at most. Among the few electric models often found on the used car lot, many were luxury models including the Tesla Model S, a large sedan, or the Tesla Model X, a three-row SUV.
The market is much bigger and more diverse now. The number of used electric cars for sale has tripled over the past year, according to Recurrent. A recent scroll through used car listings in the New York area showed a wide range of cars, including a Porsche Taycan listed for more than $80,000 and Chevrolet, Hyundai and Nissan models selling for less than $25,000.
Buying a used electric vehicle might not be right for everyone, especially if you have to drive long distances or live somewhere where charging stations are few and far between. But if you have a place to plug in and don’t frequently drive several hundred miles a day, you can get a good deal.
c.2023 The New York Times Company. This article originally appeared in The New York Times.
