New vehicle sales were strong in the first quarter, but they’re almost stagnant when compared with used EV sales, which jumped 32% during the same time period.
During the first quarter of 2023, EVs accounted for 7% of new vehicle sales. According to Cox Automotive analysts, the popularity of electric vehicles in the U.S. will result in new EV sales eclipsing the 1 million-unit mark in 2023. EV sales accounted for 5.8% of all vehicle sales in 2022, or about 807,000 vehicles.
As more and more people are buying EVs, the pool of used battery-electric models is growing. Battery-electric buyers are loyal, and once they’ve bought an EV, statistics show they’re highly likely to buy another one.
Since viable EVs have been available for several years now, some owners are trading in their first or even second EV to buy a new one.
“Every new vehicle eventually becomes a used vehicle,” said Jonathan Smoke, chief economist of Cox Automotive. “Our data sets indicate used EV sales will begin increasing rapidly from here, following a clear path set by new sales. In Q1, our team at Manheim processed a record number of used EVs in the wholesale market. This is an approaching challenge for the industry we’ve already begun to embrace, as placing a value on a used EV is a new set of skills we all need to develop and refine.”
Why used EVs are appealing
The average price for a new electric vehicle in the U.S. was about $59,000 in Q1, Cox noted. The average new vehicle price was about $49,000 during the same period. The average used EV price? About $43,400 — and used models are eligible for some tax credits. That number is 4% lower than the year-ago period.
The U.S. Congress created a $4,000 used EV tax credit last summer. To qualify, buyers must purchase a used EV for $25,000 or less from a dealer; the maximum credit is 30% percent of the sale price up to $4,000. Used EV buyers adjusted gross income may not exceed $75,000 for individuals or $150,000 for joint filers.
The lower average listing price at retail is likely the result of aggressive price cuts at Tesla, the EV market share leader. As the market leader pushes down prices for new EVs, used-vehicle prices follow suit, Cox analysts noted.
Retail used electric vehicle sales — EVs sold through a licensed dealership — increased significantly in Q1, according to Cox Automotive data, up 32% year over year, to 42,753 units. (Sales volume estimates do not include private-party, consumer-to-consumer sales). Used EV sales in Q1 2023 represent twice the volume sold in Q1 2021.
More and more used EVs are entering “the system.” Manheim, the largest wholesale vehicle marketplace in the U.S., noted the number of EVs it sells is still relatively low but rapidly increasing. Through Q1, Manheim operating locations across the U.S. processed nearly 9,800 used EVs, an increase of 40% from the same period in 2022.