Used EVs have never been cheaper. But are they a good deal?

Current deals on used electric vehicles (EVs) are nothing short of astounding.

For instance, a 2017 Nissan Leaf that originally retailed for approximately $35,000 can now be purchased for under $6,500. Similarly, the market is seeing dramatic declines in other models. A Hyundai Kona, initially priced over $43,000 in 2021, is now available for under $16,000. Even the more recently launched 2024 Hyundai Ioniq 5, which started at around $62,000, is listed for approximately $37,000 after just 8,000 miles of use. The luxury segment isn’t spared either; a high-end Audi e-Tron GT that was valued at roughly $124,000 three years ago can now be found for about $52,000. These figures become even more attractive in light of available government incentives that can drive prices down further.

According to Cox Automotive, the drop in prices led to a staggering 59 percent increase in used EV sales year-over-year as of August. However, this trend raises the question: Are even well-priced used EVs a wise investment, considering their fast depreciation? Experts suggest that the answer may vary depending on the vehicle and the buyer’s intended use.

Stephanie Valdez Streaty, Cox Automotive’s director of industry insights, stated, “I would buy one now.” In August, the average price of used electric cars was only about $900 higher than that of comparable gas vehicles—the lowest premium on record. This premium can typically be offset by savings from fuel costs and reduced maintenance expenses, as EVs generally don’t require oil changes. “There’s a compelling value proposition for purchasing a used EV,” Valdez Streaty continued.

Nevertheless, some potential buyers remain skeptical, influenced by their past experiences—like purchasing a used Leaf a few years ago, which may not have met performance expectations. John Helveston, an engineer and professor at George Washington University, pointed out that battery technology has significantly improved, leading to longer-lasting batteries and better overall efficiency. However, many warranties only apply once battery capacity falls below 70 percent, so understanding the original range of the vehicle is essential for assessing future depreciation rates.

“If your starting range is below 200 miles, it typically doesn’t hold its value well,” Helveston indicated. In contrast, vehicles like Teslas, which offer ranges between 300 and 400 miles, tend to experience slower depreciation over time.

Research indicates that while EVs depreciate more quickly than gasoline vehicles in the initial two to three years, the depreciation rates tend to converge after that, eventually aligning with the typical decline seen in all vehicles.

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Incentives also play a crucial role in the decision-making process. Income-qualified buyers can access a federal tax credit up to $4,000 on used EVs priced under $25,000, with new EVs potentially qualifying for credits as high as $7,500. Many states and municipalities offer their own rebates, but these federal credits might be ending soon, raising concerns about future price increases for electric vehicles. Conversely, a loophole in these incentives has resulted in a surplus of leased EVs expected to enter the used market in the coming years, potentially exerting downward pressure on prices. The interaction of these factors remains uncertain.

As Kevin Roberts from CarGurus observed, “There’s no crystal ball on this. However, given recent patterns, we don’t anticipate the price volatility in used EVs that we’ve seen in the past.”

One of the challenges faced when purchasing used EVs is the gap in available information. “With a gas vehicle, you can derive a lot of insights from age and mileage. For an EV, there’s significantly less certainty,” explained Helveston. Battery health is often influenced more by usage patterns than by age or mileage. For example, frequent use of fast-charging methods can considerably affect battery life compared to slower home charging.

To navigate these uncertainties, potential buyers can take proactive steps, such as asking the dealer or seller to charge the vehicle to full capacity before a test drive. Comparing the range displayed on the dashboard to the manufacturer’s original specifications can provide a rough gauge of battery health. Generally, EV batteries should retain approximately 90 to 95 percent of their capacity after a few years.

Valdez Streaty noted that many dealers may not be familiar with how to assess battery health. However, the auction network Manheim, operated by Cox, rates battery capacity on a scale of 1 to 100, which dealers can use to inform potential buyers. “You definitely want to aim for something that’s rated above 80 percent,” she advised.

Another strategy is to focus on finding the most affordable used EV possible and using it moderately, particularly for individuals who only have local travel needs. Helveston shared his personal approach: he purchased a ten-year-old Leaf through Facebook Marketplace for $5,000, which has a range of just 60 miles. Since he typically drives no more than 30 miles daily, he sees little downside to this investment.

“The miles are double what I require,” he concluded, enjoying savings on fuel and maintenance costs. “If it ultimately fails, I’ve only invested five grand and can easily purchase another.”