Gas prices aren’t the only factor fueling used EV sales

Recent data on electric vehicle sales has unveiled a stark contrast between new and used models. New electric vehicle sales plummeted by approximately 28% year-over-year in the first quarter, primarily due to the elimination of the $7,500 federal tax credit under the previous administration, as reported by Cox Automotive. In contrast, the market for used electric vehicles is thriving, showing a remarkable 12% increase compared to the same period last year. The momentum for used EV sales has also been notable on a shorter timeline, with a 17% rise observed between the fourth quarter of last year and the first quarter of this year. One of the driving forces behind this trend is the escalating price of gasoline, which has surpassed $4 per gallon on average, prompting consumers to seek more economical alternatives. Additionally, an influx of expiring leases is significantly contributing to the availability of used EVs. The Financial Times notes that many consumers opted for EV leases during the early 2020s, and now, as these leases come to an end, a substantial number of pre-owned electric vehicles are entering the market. By the end of this year, electric vehicles are projected to represent 15% of all off-lease vehicles, a significant increase from 7.7% at the beginning of the year. This surge in supply has led to a decrease in prices, adhering to the basic economic principles of supply and demand. Currently, the average price for a used electric vehicle stands at $34,821, which is almost on par with the $33,487 average for traditional gasoline-powered vehicles. This shift has made electric vehicles increasingly accessible to a broader consumer base, further fueling the growth of used EV sales.