Used electric vehicle values continued to decline in January, as sellers lowered their prices to accommodate tax credit eligibility requirements set in the Biden Administration’s Inflation Reduction Act.
In comparison to the standard $7,500 incentive for new EVs, used electric cars earn $4,000 at most. This lower amount also comes with its own set of rules, removing the sourcing stipulations placed on newer models but adding income requirements which prohibit individuals making over $75,000 a year from qualifying. The IRA also requires used EV prices to fall under $26,000 to be eligible.
Unsurprisingly, when both credits opened in January, values dropped in response. According to data from Recurrent Auto, average prices for several popular EV models dropped from $42,265 to $32,677. Although a majority of the discussion focused on manufacturers such as Tesla and Ford, used EV prices also declined. Last December, the number of preowned electric cars listed on the market for under $26,000 was 16%. In January, this number quickly grew to 20%.
The decline in used EV prices is in stark contrast to the rest of the preowned market. Although analysts had expected overall used car values to continue their downward decline, prices rose 4% in the latter half of January according to Cox Automotive. Although lower price tags are typically frowned upon in the auto industry, in this instance the decline is likely driven by retailers. Much like Tesla, dealers are adjusting prices on used EVs to ensure they qualify for tax credit eligibility. The promise of a $4,000 rebate is likely to sway EV hesitant consumers, opening up new possibilities for storeowners in 2023.
Did you enjoy this article? Please share your thoughts, comments, or questions regarding this topic by connecting with us at newsroom@cbtnews.com.
Be sure to follow us on Facebook, LinkedIn, and TikTok to stay up to date.
While you’re here, don’t forget to subscribe to our email newsletter for all the latest auto industry news from CBT News.
