Used EV Prices Crater As Demand For New Models Rises

Electric vehicle (EV) new car demand statistics and EV used car pricing seem to be pointing in opposite directions, making conclusions regarding overall EV customer demand less certain than one might expect. Such conflicting signals are becoming quite normal in many aspects of the economy and market valuations.

Constructively, U.S. demand for new EVs was robust in 2Q 2023. U.S. consumers bought a record 295,355 new battery-powered cars in the quarter, up around 14% from 1Q 2023 and up a whopping 48% versus 2Q 2023, according to Cox Automotive. Tesla held a dominant 59% market share of all EVs sold in 2Q 2023, though down from 62% in 1Q 2023, as it sold more than 175,000 cars in the just-completed period. In aggregate, EVs comprised 7.2% of the U.S. new car market in 2Q 2023, down slightly from 7.3% in 1Q 2023 and up from 5.7% in the year-ago period.

Source: Cox Automotive.

Price cuts played a big role in the industry’s impressive sales growth in the quarter. Cox reported that the average price paid for a new EV in June 2023 was down nearly 20% from June 2022. Of course, Tesla’s aggressive pricing policies in 2023 almost singlehandedly caused prices to decline.

On the other hand, the prices of used EVs are suggesting a less robust demand picture. In a June 2023 report, the auto research firm said that average used EV prices have plummeted this year and that these declines are accelerating. In June 2023, the year-over-year price drop was 29.5% versus 16.8% in March 2023 and 8.8% in January 2023. 

An executive summarized the discouraging figures: “Electric vehicle prices are now falling at nearly 10 times the rate of the average used vehicle, reflecting a clear shift in EV supply and demand.”

Tesla used cars have suffered the steepest price drops among all used cars, including traditional internal combustion engine (ICE)-powered vehicles and EVs. Despite the small quantity of EVs produced as a percentage of all car production, six EV models (three of them Tesla models) are among the ten used vehicle models which have experienced the greatest price declines.

Incidentally, some ICE-powered used cars have appreciated in value. The biggest gainers include the Mercedes SL convertible, the Fiat 500X crossover, the Chevrolet Suburban, and the Porsche 911 convertible and 718 Cayman coupe.

Information for this story was found via Cox Automotive and the sources mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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