Used electric car prices are rising, here’s why

As more automakers begin to shift toward electric vehicle production, we’re starting to see incredible choices in the plug-in vehicle marketplace. At least, “we” are if you’re someone who is able to spend the equivalent of between thirty-thousand and eighty thousand U.S. dollars for your next car. 

Because the majority of electric vehicle owners don’t go back to internal combustion after they’ve got behind the wheel of an EV, traditional wisdom has always followed the notion that when an existing electric car owner buys a new ride, their old vehicle ends up on the used car market. 

Experience has taught us that those cars , often off-lease models,  have suffered some pretty large amounts of depreciation (with cars made by Tesla being the only true exception to this). And, a depreciated car on the used car market is great news for those of us who can’t afford a brand-new, all-the-bells-and-whistles EV. 

Granted, there are some electric cars that don’t fare so well as used EVs,  the Nissan LEAF and other cars with battery packs that are prone to early, noticeable battery degradation always require a little extra careful examination before you sign on the dotted line. But for the most part, used EVs rock. 

With new electric car sales at an all-time high, while traditional internal combustion engine models are still struggling to recover from COVID-level dips, it’s fair to expect that the number of used EVs hitting the marketplace is also rising. You might also assume that more cars equals more supply and thus a general downward trend in Used EV prices. Historically, that’s certainly been true. 

But in recent months, the prices of used electric cars have skyrocketed, with some models going up in value by several thousand. What’s more, it’s becoming harder to find a perfect used EV. This is especially stark as used EVs only spend about one half the time in the used car marketplace than they were a year ago, according to Recurrent Auto, a website that aims to become the CarFax for electric car sales in North America. 

Recurrent Auto utilizes battery health reports from individual cars to give buyers a more accurate valuation of what a particular used vehicle should be worth. It’s been tracking used EV prices, and it says that the average price of pre-twenty-nineteen model year electric cars have gone up on average twelve hundred dollars since March, with prices varying widely in different parts of the U.S. 

We have also taken a look at the data provided by Recurrent Auto, examined some of the reasons it cites for a rise in used EV prices, and have some of our own thoughts to add to the mix. Let’s start with the hard figures. 

First, it reveals that while Teslas represent sixteen percent of the U.S. national used car inventory, only seven percent of those come from Tesla. The majority, 39 percent of used Teslas, are sold through small dealerships. In total, it tracked 529 dealerships who sold used Teslas, followed by 37 percent of used Teslas from five large online national retail specialists. Think companies like Carvana. The rest, 24 percent of used Teslas, came from a total of 32 large regional dealerships. 

Of course, not represented here are private sales, because Recurrent isn’t tracking individual private sales as far as we’re aware. It does however say that it expects used Teslas to account for between 30 - 40 percent of all used electric cars in the not-too distant future, partly because of the sheer number of cars Tesla has now produced. 

How much you pay for your used Tesla though will vary dramatically on where you live and of course, the usual things like the condition of the car, how much in-demand each model is, and what local incentives are like. 

As a side, it’s important to note that mileage alone doesn’t determine a car’s price, and that’s especially true for electric vehicles. But, Recurrent states that the most expensive place to buy a 2019 Tesla Model 3 in the U.S. is Georgia, where the average price of that model year car sits at 46,793 dollars. Meanwhile, Ohio is the lowest average price, at 39,002 dollars. Importantly too, the average price increase from March to May for a used Tesla Model 3? 3,000 dollars or more. 

That pattern is reproduced with other cars too. If you want a 2017 Chevrolet Bolt EV, you’ll be paying through the nose in Washington State with a sticker price close to 22,000 dollars, even though Chervolet is currently offering massive discounts on brand-new Bolts that bring them close to that price. Meanwhile, if you want the cheapest Bolt EV in the union, Connecticut will be your best bet, with an identical car costing just 16,379 dollars. Even with the ongoing recall and battery fire issue casting a shadow on Bolt EVs, the massive discounts on brand-new models, and the upcoming, more affordable 2022 model year Bolt, used Bolts are now on average 2,700 dollars more expensive than they were a month ago. 

Nissan LEAFs are similarly dramatically different in their pricing. A Vermont LEAF buyer can nab up a 2018 for under 16,500 dollars, while a friend in Colorado will pay five grand more. 

But perhaps the most noticeable price hike? That comes from an unexpected angle - the Chevrolet Volt range-extended electric car. It was discontinued in 2019, and while not a pure battery electric vehicle, demand for them is through the roof. 

Recurrent says that here in Portland, Oregon, used Volts are snapped up extremely quickly, with used Volt prices continuing to soar. In one month alone, used Volt prices have gone up by nearly 4,000 dollars, something our very own Erin Carlie noticed when she recently purchased her Volt. If you haven’t seen her recent video on her buying experiences, click here. 

If there are more new EV choices and more cars coming to market, why are used EV prices soaring? At the top of the list, says Recurrent, is the ongoing chip shortage in the electronics and automotive industry. Car companies have started to ramp down their production as they struggle to obtain the necessary computer chips needed to continue with volume production, and that’s throttling available cars for customers to buy. 

And of course, when a car is in demand, and supply is restricted, it means new cars are going up in price thanks to dealer fees and markups. So, many people are just forgoing new and going to the used market. 

The problem is also compounded by dealers. They’re offering better trade-in values on used EVs to customers who are upgrading to something newer, and thus they’re marking up used EVs on their lot to recoup their higher trade-in prices. 

Then there’s the recent 2021 economic stimulus payments that went to most U.S. households. While for many recipients it provided a much-needed lifeline to help them make rent, pay bills, and survive the economic downturn that was caused by COVID, for others, it wasn’t. Many people used the cheques to pay-down debt, and fund large-ticket items, like helping finance a car. That’s helped drive demand even higher, and that also results in higher overall prices. 

Those are the two main reasons given by Recurrent, but there are some other things we need to take into consideration too. 

For example, while COVID-19 hasn’t directly caused people to rethink their driving habits, many people have examined the overall improvement in air quality in the last 12 months and, combined with political changes in the U.S., decided to switch. 

We should also not discount the increased promotion of electric vehicles by the U.S. Government. President Biden has been talking up the need to transition to electric vehicles for some time, and so it’s no surprise that the general public are showing more interest in EVs - more interest, means higher demand, which means prices go up. And frankly, when your government is promising to spend billions on expanding charging infrastructure, the chances are that you’ll be more likely to feel comfortable making the switch. 

This is of course, being mirrored elsewhere in the world too; we’ve seen demand for electric cars spike as more and more regions of the world enact policies that proactively reward citizens for making the switch to electric. And, while not all places offer incentives for used car purchases, many do. 

Here in Oregon, for example, there’s a very generous incentive scheme that’s income-dependent. If you make more than a certain amount of money every year, you’re not eligible. But if you’re under the threshold, it doesn’t matter if you’re buying new or used, you can get financial help. 

Oil prices have paid a part too. This year, oil has generally trended upwards, with prices hitting 65 dollars per barrel of crude oil. Tie this in with events like the recent blocking of the suez canal by a stuck ship, and prices are expected to remain high throughout the rest of this year. 

With all that pent-up demand, reduction in new car availability and rumors suggesting Tesla has sold out of its second-quarter production run of vehicles already, it’s no wonder that used electric cars are becoming more and more expensive. So where does that leave you, if you’re in the market?
First, do your research before you buy anything. I’d advocate for what Erin did when she was looking at buying her Volt. Find a local car to test drive, but perhaps one you’re not super-bothered about buying, to make sure that the vehicle you’re looking at is one that you’re going to be able to live with. Seriously, you’d be surprised how many people buy used cars these days, sight unseen. 

Then once you’ve confirmed you actually like the make and model of car you’re looking at, give yourself a figure that you’re happy to buy at, and a figure you’re happy to walk at. While the market is most certainly a seller’s market right now, it’s important to go in with a figure in your mind that you’re comfortable with. 

Start negotiations at a price below what you’re happy to pay, and see if you can get some discounts or concessions. Be willing to point out things that devalue the car (like scuffs or paint chips) and use them to justify your price. And of course, make sure that the price you’re suggesting isn’t out of the normal price range. There’s no point trying to buy a car that is clearly worth more than you’re willing to pay for it. But if you’re within the ‘average’ price range? You might get lucky, so, good luck! 

Original article in video format here: https://www.youtube.com/watch?v=TSa6DlKSNeE