In the U.S. used car market, electric vehicle prices have become surprisingly affordable. Recent reports indicate that resale values for electric vehicles (EVs) have plummeted, dropping as much as 25% compared to prices from two years ago.
Two years back, some used electric cars were priced nearly on par with new models—or even higher—largely due to widespread supply chain issues that created a scarcity of vehicles. However, the landscape has shifted dramatically. Dealership lots are now overflowing with electric cars that aren’t selling, and manufacturers like Tesla have been slashing the prices of new models to stimulate sales.
The influx of discounts on new electric cars has helped revive sluggish sales but has also pushed used car prices down sharply. According to data from the car buying site Edmunds, the average price for a three-year-old electric vehicle in September was about $28,400, which is lower than the price of comparable gasoline-powered vehicles from the same year, reflecting a 25% drop since the beginning of 2023. This drastic decline in the price of used electric cars stands in stark contrast to the overall stability in the used car market.
Analysts suggest that the steep drop in prices for used electric vehicles could attract budget-conscious buyers. Additionally, many new car owners who financed their purchases now face the reality of owing more on their loans than their vehicles are worth.
Tesla owners, in particular, have felt the impact deeply. Last year, Tesla reduced prices on some new car models by as much as one-third, prompting a wave of price cuts from competitors. Furthermore, rental giant Hertz sold a significant portion of its Tesla fleet to the used car market in January, which further depressed prices.
Data from CarGurus shows that the average asking price for the popular used Tesla models—Model 3 and Model Y—has fallen by around 25% over the past year.
One Tesla Model 3 owner, named Lange, expressed his frustration, stating, “They keep reducing prices, impacting the used electric vehicle market.” When he purchased his Model 3 in 2018, it was valued at approximately $35,000, which matched his loan balance. However, by early this year, the resale value of his Tesla had dropped below his remaining loan amount by $10,000. Feeling disheartened, he sold the Model 3 and switched to a Kia EV9. Tesla has not responded to requests for comment.
As consumer interest in electric vehicles has waned this year, manufacturers have become more proactive in promoting new models, offering cheaper leasing options and low-interest financing plans, which has weakened demand in the used car market.
Leasing has quickly emerged as the most popular method for acquiring new electric cars. According to Edmunds, at the beginning of this year, only 16% of electric vehicle sales at dealerships were for leasing purposes; that figure has now surged to nearly 80%.
Industry leaders admit they misjudged the market, and this miscalculation is impacting used electric vehicle prices. In response to the oversupply, automakers are scaling back their ambitious plans, reducing production, and postponing expansion projects, while some are proactively adjusting their leasing strategies to help maintain the value of used vehicles.
