The resale market for electric vehicles (EVs) is evolving rapidly, presenting both opportunities and challenges for buyers and sellers. Correctly pricing an EV for resale requires a savvy understanding of the marketplace. Selling a used EV can be a bit different from selling a conventional car due to the unique factors influencing the EV market.This blog will focus specifically on what’s driving the market, which EVs have the best resale value and how you can best navigate the ever-changing world of used EV sales.
Market Dynamics
Tesla has made a name for being the dominant player driving the EV industry. In 2023, Tesla introduced aggressive price cuts to their vehicle lineup which sparked a surge in new Tesla EV sales. According to apnews.com Tesla’s first-quarter vehicle sales rose 36% after the company cut prices twice in a bid to stimulate demand.
Tesla’s decision to highly incentivize new vehicles has significantly impacted the resale market for used EVs. The price gap between new and used EV models has shrunk dramatically, making used Tesla’s less attractive to buyers, who opt to purchase new, leading to a drop in resale values. “Consumers didn’t used to be worried about the resale value of an EV, but (Tesla chief executive Elon) Musk cutting prices made people feel like they owe $50,000 on their Tesla and now, it’s only worth $40,000,” said Pat Ryan, chief executive of CoPilot.
The government’s push for more EVs on the road has also affected the resale market. Currently, new EVs come with an additional $7500 in available tax credits while a used EV, has a $4000 max, but only if the vehicle being purchased is under $25,000. By lowering the upfront cost, tax credits make EVs accessible to a broader range of consumers, potentially encouraging more people to consider a new EV as a viable option.
In addition to pricing cuts and government incentives, another market factor affecting the resale value of EVs is vehicle depreciation. There’s a saying that the moment a new car rolls off the lot, it depreciates by 15%. We expect cars to lose their value the moment they go from “new” to “used” and unfortunately EVs are statistically worse in this regard. EVs have the highest depreciation rates among all vehicle types, on average losing more than 49.1% of their value after five years, compared to the industry average of 38.8%.
This rapid depreciation is driven by several factors, including the fast pace of technological advancements, concerns about battery longevity, new EV incentives and market demand. It is important to note that the rate of depreciation can vary by model and brand. Popular or newer models with advanced technology and longer range may retain their value better than older or less popular models.
Realistic Expectations for Selling a Used EV
Understanding current market conditions can help set realistic expectations when trying to sell your EV. According to Cox Automotive, the current national average list price for a used vehicle is $25,251, a 7% drop from a year ago while a used EV is $37,851, down 14% in a year.
Demand for your specific EV model in your area, local trends, including the availability of charging infrastructure and regional preferences, can impact how quickly and at what price you can sell your EV.
Timing can also significantly impact the resale value and ease of selling an EV. Selling during periods of high EV demand may be advantageous. For example, the end of the year is often a good time to sell, as potential buyers might be looking to take advantage of tax credits before the new year. Avoiding times when EV sales are generally slower (January) can help you achieve a better sale price.
If you’re trying to identify value in the used EV marketplace, it pays to know which models have garnered the most buzz and are seen as the most attractive. Despite the challenges, some EVs do hold their value better than others. According to iSeeCars.com, the top-rated EVs in terms of resale value are:
1. Tesla Model 3
2. Tesla Model S
3. Chevrolet Bolt EV
4. Nissan Leaf
5. Hyundai IONIQ Electric
6. BMW i3 Electric
These models are popular due to their reliability, range and brand reputation. If you own one of these EVs, you might fare better in the resale market.
Tips for Selling Your Used EV
1. Do Your Research: Use online valuation tools to get an idea of what your EV is worth. Websites like Kelley Blue Book, Edmunds, and iSeeCars can provide valuable insights based on current market trends. Try to find exact matches based on your model, trim, year, extra features and mileage – and don’t be afraid to expand your search if there are no similar cars nearby.
2. Highlight Incentives: If your state offers incentives for used EVs, make sure to highlight them in your listing. This can make your car more attractive to potential buyers.
3. Get an Inspection: As with any vehicle you plan to sell, a thorough inspection and a clean bill of health can boost buyer confidence. Consider getting an independent inspection and sharing the report with potential buyers. A common concern for prospective EV drivers is the battery and whether it’s in good working condition. By providing up-to-date information on the quality and overall state of your EV, you can ease those concerns and net a higher value.
4. Be Transparent: Be honest about the condition of your EV, including any wear and tear or battery degradation. While the marketplace might be struggling, there are still interested buyers looking for an EV for its eco-friendly design and are willing to buy EVs in all types of conditions. Plus, transparency can build trust and facilitate a smoother sale.
5. Prepare your Vehicle for Sale: If your EV’s battery is in a poor state, the technology isn’t working properly, or any other issue is present, you’re likely to get less value out of a potential sale. Repairing your EV can be costly, so it’s important to consider the potential returns you could net and leverage it against the costs of repair.
Recap
The EV resale market is evolving, and just like with any other automotive market, future developments may shift the overall dynamics. As battery technology improves and the public gains more confidence in long-term EV ownership, resale values may stabilize. Conversely, as the market becomes saturated with used EVs, buyers will have more options, potentially driving used EV prices down further. Selling a used EV comes with its challenges, but understanding the market dynamics and setting realistic expectations can help you navigate the process successfully.