The electric car market is experiencing a significant shift as new electric vehicles (EVs) are becoming cheaper than ever, while a robust used market is providing budget options for prospective buyers. However, this has resulted in frustration for existing EV owners who purchased their cars at high prices, only to see their value depreciate rapidly in the resale market. Data from EV battery analysis firm Recurrent shows that used EV prices have fallen by 27% year over year, with some models selling for as low as $10,000. This shift in pricing dynamics has created a buyers’ market, with many used EVs now priced comparably to gas-powered cars.
Historically, new electric cars were priced at over $50,000, making them unattainable for many buyers. However, recent price cuts by automakers, the emergence of a budget-friendly used market, and new tax incentives have brought prices down significantly. In fact, some dealers are now able to offer up to $4,000 off the sticker price of used and leased EVs, making them even more affordable. As a result, EV sales prices have dropped by 13% annually, largely due to price cuts by Tesla, which has a significant market share in the EV industry.
Tesla’s pricing strategy has set the tone for the entire industry, forcing other automakers to adjust their prices to stay competitive. This has created a ripple effect, leading to lower prices across the board. Data from Cox Automotive also shows that EV owners are increasingly choosing to lease their vehicles rather than purchase them outright, with 54% of non-Tesla EVs being leased compared to just over 20% for the overall auto market. Leasing provides a level of protection against depreciation, as the bank assumes the risk of the car’s resale value.
Although falling prices have negatively impacted early EV adopters who purchased their cars outright, experts believe that this trend is ultimately beneficial for EV adoption at large. Lower prices make EVs more accessible to a wider range of consumers, potentially increasing market penetration. While used EV sales currently represent only 2% of the total market, new EV sales are close to 10%, indicating a growing interest in electric vehicles. This shift in pricing dynamics could open up new opportunities for EV manufacturers to tap into a larger market segment.
In the long term, the decline in EV prices is seen as a positive development for the industry, as it makes electric vehicles more affordable and accessible to a broader range of consumers. This could lead to increased adoption rates and further growth in the market. While existing EV owners may be feeling the effects of rapid depreciation, the overall outlook for the EV market appears to be optimistic. As prices continue to fall and new incentives are introduced, the future of electric vehicles looks bright.
