Sales Surge for Used EVs

While sales of new EVs are down since the expiration of the federal incentive, used EV sales have surged. As reported by CNBC based on data from Cox Automotive, used EV sales were up 27.7% in March relative to a year earlier and 53.9% on a month over month basis, indicating an impact from the war-related run-up in gas prices.

Multiple Reasons for Used EV Tailwinds

The Inflation Reduction Act incentive rules heavily biased toward leased vehicles. While the act was passed in 2022, the rules that exempted leased vehicles from sourcing and manufacturing requirements went into effect in 2023, so we are now seeing the beginning of an influx of relatively new vehicles coming off lease, which will only increase over the next couple of years.

Cox also reports a narrowing of the price differential with the average used EV transaction price down 6.1% YoY to $34,653, and the premium over ICE narrowing to $1,012 in March.

One important thing to note is that these broad averages don’t tell the whole story in that they don’t compare like to like. Based on reporting from Recurrent and CDK Global, at a given price point, the EV is likely to be newer, have lower mileage, and be more luxurious.

We reached out to CarMax

CarMax is the largest used car retailer and has 3 stores in Connecticut. We reached out to them to get their take on what they’re seeing. Their response was more tempered than what we are seeing from Cox and reflects ongoing consumer concerns. While they have restrictions on sharing sales data, they report 11.2% of clicks from their search page going to “EVs and hybrids” in April, up from 9.1% in February.

CarMax SVP of Retail, Wes Dunn, told us,

“As gas prices rise, they can serve as a starting point for consideration, but whether shoppers move beyond initial interest depends largely on how confident they feel about what EV ownership looks like in practice. Consumers are weighing practical questions around range, charging access, battery durability, and overall cost of ownership as they assess whether an electrified vehicle fits their needs and lifestyle.

Expanded charging infrastructure and improving perceptions around range are helping ease some uncertainty, but education and transparency remain critical, particularly for first‑time EV shoppers. Affordability also plays an important role, and for many consumers, used EVs can offer a more approachable way to explore electric vehicles without the commitment of buying new. Ultimately, the more informed and confident customers feel, the more likely they are to consider whether a used EV is the right option for them.”

Why Used EVs Are a Good Deal

• Lots of low-mileage vehicles coming off lease with years left under the battery warranty.
• The supply will continue to grow over at least the next few years.
• Used EV prices are near parity with ICE.
• Fuel comparison – an ICE vehicle getting 25 MPG and paying $4 gallon has a cost of 16 cents per mile. The most popular EV, the Tesla Model Y, gets 3.5 miles per kWh. If the cost per kWh is 25 cents, that works out to 7.1 cents per mile.
• Batteries last a long time. Recurrent put out this great graphic showing the longevity of modern EV batteries.

Used vehicles represent about three quarters of all vehicle sales in the US in a given year. It is a big step forward that EVs are beginning to get traction in this market.