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Prices for both used and new electric vehicles have dropped substantially from a year ago. But don’t rush to buy: Costs are still relatively high.
“It’s not a consumer-friendly market right now,” said Joseph Yoon, a consumer insight analyst for car shopping guide Edmunds.
Prices for used electric vehicles fell by almost 30% between June 2022 and June 2023, according to a recent study by iSeeCars, which analyzed more than 1.8 million cars during that time period to identify which models have the largest price drops. New EV prices fell nearly 20% year over year from their peak of $66,390 in June 2022 due to inventory growth, a study by Kelley Blue Book found.
But those big drops represent a return to normal. A year ago, demand for electric vehicles due to high gas prices from the war in Ukraine sent prices on an upward swing. Now, more sector competition, higher inventory and incentives are pushing prices back down.
Yet, there are reasons for interested car shoppers to be cautious. Costs of new EVs are still high, experts say, and there can be risks buying a used EV.
What’s behind falling prices on new EVs
About 300,000 electric vehicles were sold in the second quarter of this year — a record — as new models were introduced with a wider price range, said Michelle Krebs, an executive analyst at Cox Automotive.
Tesla has been cutting its prices to stay competitive, especially with its high inventory of unsold vehicles, she said. Its price cuts helped lower the average cost to $53,438 in June, she added.
However, other manufacturers’ models, such as General Motors’ Chevrolet Bolt EV — which sells for about $30,000 — also factored into the decline of the average price, given the sticker price is unusually cheap for the sector. Additionally, companies such as Hyundai and Kia lowered the prices of some models to qualify for the EV $7,500 tax credit from the Inflation Reduction Act.
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Ford Motor also slashed the price of its F-150 Lightning EV pickup truck by $10,000, lowering the starting price of its cheapest version to $50,000.
The manufacturer and dealer incentives for EVs are also far higher than incentives for regular gas cars, said Krebs.
“There’s a lot of ways to incentivize, it’s not just purely getting the price down at the dealership,” she said.
Yet these cars are still expensive, and they’re not the car for everybody, said Yoon. While smaller models such as the Chevrolet Bolt cost less and qualify for the $7,500 tax credit, many car shoppers are looking for SUVs, either compact or with three rows.
“EVs of that size are still very expensive,” Yoon added. “We’re not quite there yet in terms of having options across the board for everybody.”
It’s hard to know what these lower prices on new EVs will mean in the long run, especially as more used ones become available, said Krebs.
“We’ve never had a used EV market; it’s only beginning to develop,” she said. “It may end up expanding the EV market by making EVs accessible and more affordable to people.”
“We just don’t know; this is all new territory.”
How to shop for a used EV
There is a tax credit for used electric vehicles worth up to $25,000, but only a handful of used EVs have depreciated to cost under the ceiling price. Those cars are now 5 to 7 years old and considered a completely different generation.
To that point, car shoppers looking into used electric vehicles should be cautious about their battery life and utility, experts say. For instance, while the latest EV models are getting 250 to 400 miles per charge, used EVs may only go up to 150 miles per charge.
“That’s a huge kind of inconvenience that you also have to consider,” said Yoon, especially because it can take 45 minutes to recharge.
There’s no determined way to tell the value or the longevity of a used EV battery like there is for gas engines, and experts are unaware of what the long-term running costs may be. While it’s hard to gauge battery life, make sure you take a test drive and get a professional inspection.
Plug-in hybrids, leased EVs may be smart options
As new and used electric vehicle prices still seem high, here are two alternatives shoppers should look into if they want to switch to electric transportation.
“Considering plug-in hybrid vehicles is a great place to start,” said Yoon.
You snag all the benefits of an electric vehicle without the entire financial splurge. Leasing an EV is also another option to consider, he added.
Considering plug-in hybrid vehicles is a great place to start.
Joseph Yoon
consumer insight analyst for Edmunds
“The best thing to do right now is leasing an EV if you have the money and the means to do it,” he said.
This is considered a loophole where buyers can bypass requirements they would have otherwise needed to meet in order to qualify for the $7,500 tax incentive.
A lease is considered a commercial transaction because the automaker’s financing company is letting you borrow the vehicle. Therefore, the transaction qualifies for the full $7,500 benefit and you may get it as a discount to your negotiating price, said Yoon.
“The only caveat there is that [dealers] don’t have to give you that $7,500,” he added. Either make sure the dealer will give you the benefit or specifically look into dealers advertising the offer.
Correction: This story has been updated to reflect that prices for used electric vehicles fell by almost 30% between June 2022 and June 2023, according to a recent study by iSeeCars. A previous version misstated the time period of the price drop. The story has also been updated to correct the spelling of Kelley Blue Book and to correctly reflect the name of General Motors.