Electric Vehicles Becoming More Affordable as Used Car Prices Drop

Model YElectric vehicles (EVs) are becoming more accessible and affordable, driven by falling prices and increasing inventory. This shift is particularly evident in the used car market, where sales of the Tesla Model Y are surging as prices continue to decline.

Rebecca Lindland, Cars Commerce Senior Director of Industry Data and Insights, highlighted this trend in an email, stating, “Now is a good time to buy a new or used EV. Inventory is up, sending prices down.” As of May 2024, used 2021 Model Ys start at about $30,000 on Tesla’s website, with those having lower mileage typically ranging between $32,000 and $36,000.

Tesla faces challenges as new car prices continue to drop. In the first quarter of 2024, the average transaction price for a Tesla was $52,315, a 13.5% decrease from the previous year. Tesla’s market share of the electric vehicle segment also fell to 51.3% from 61.7% a year earlier, according to Cox Automotive, which publishes Kelley Blue Book. Many automakers have followed Tesla’s lead in cutting prices, resulting in significant drops in used car pricing. For example, the Chevy Bolt EV starts at about $27,000 but can dip below $20,000 after factoring in federal tax credits, driving used Bolt prices to well below $18,000.

Incentive spending on EVs has increased notably over the past year, and leasing has become more popular. In the first quarter of 2024, about 27% of all EVs were leased, more than double from the previous year. Leasing offers advantages, such as lower upfront costs due to steep depreciation on some models and the ability to qualify for the full $7,500 incentive provided by the Inflation Reduction Act.

These trends suggest that the market for electric vehicles, both new and used, is becoming increasingly favorable for consumers. With falling prices, rising inventory, and substantial government incentives, now is an excellent time to consider switching to an electric vehicle.