Used Electric Vehicle Prices Plunge Faster Than Gas Cars, Eight of Top 10 Declining Models Are EVs

Analysis: Declining Prices of Used Electric Vehicles Outpace Gas Cars

Introduction:
A recent analysis by Cox Automotive reveals that the prices of used electric vehicles (EVs) are experiencing a more significant decline compared to their gas-powered counterparts. This decline is occurring amid an overall decrease in wholesale used car prices. The Manheim Used Vehicle Value Index, which tracks pricing trends in the used car market, shows an 8.9 percent decline in June compared to the previous year. EVs saw the most substantial fall with a 16.6 percent price decline, while gas-powered vehicles experienced a 9.5 percent decrease.

Electric Vehicles Lead the Price Decline:
Among the types of vehicles, compact cars showed the most significant decline, followed by midsize cars, luxury vehicles, SUVs/CUVs, and pickups. Jeremy Robb, senior director of Economic and Industry Insights at Cox Automotive, notes that wholesale value declines have been stronger than usual in recent months. However, despite falling prices, buyer demand for used EVs remains relatively strong, with sales conversion rates exceeding those of previous years.

Projected Increase in EV Market Value:
While used EV prices are currently declining, the overall EV market value in the United States is projected to increase in the coming years. A report by Fortune Business Insights estimates that the EV market will rise in value by over 25 percent annually, reaching $137.43 billion in 2028 from $28.24 billion in 2021. The report attributes this growth to promotional activities and government policies that help overcome consumer barriers related to vehicle range, upfront costs, model availability, and awareness.

Confirmation from iSeeCars:
A report from car search engine iSeeCars confirms the trends observed by the Manheim Used Vehicle Value Index. It finds that used EV values are declining at a much faster pace compared to used gas cars. In May 2024, used EV prices declined by 29.5 percent compared to the previous year, while used gas car prices only dropped by 6.1 percent. This reversal of prices has led to used EVs trailing used gas vehicles by 8.3 percent. Among the top 10 used car models with the largest price declines, eight were EVs, with the Jaguar I-PACE leading the pack.

Factors Contributing to Declining EV Prices:
Karl Brauer, executive analyst at iSeeCars, attributes the crash in used EV values to an oversupply of these vehicles in the market. Many EVs have entered the new vehicle market in recent years, leading to an overflow into the used car market. This oversupply has diminished the premium once associated with EVs and made them less desirable and less valuable than traditional models. Brauer believes that unless there is a catalyst to increase demand, used EV prices will likely continue to decline.

EV Ownership and Demand in America:
Interestingly, while used EV prices are declining, interest in buying electric vehicles has tapered off among Americans. A Gallup poll conducted in April 2024 reveals that although EV ownership has increased slightly, fewer non-EV owners are interested in purchasing these vehicles. This decline in interest is attributed to factors such as the high cost of EVs, lack of convenient charging options, anxiety about vehicle range, and the inability to install charging stations where people live.

AAA Survey Supports Gallup’s Findings:
A consumer survey conducted by the American Automobile Association (AAA) supports Gallup’s findings, indicating a decline in interest among Americans in buying EVs. The survey identifies the high cost of EVs, lack of convenient charging options, anxiety about vehicle range, and the inability to install charging stations as key reasons for hesitancy. Greg Brannon, director of automotive research at AAA, suggests that early adopters who desired an EV already own one, and the remaining group considers practicality, cost, convenience, and ownership experience as significant hurdles.

Conclusion:
While the prices of used electric vehicles are declining at a faster pace than gas cars, the overall EV market value is projected to increase in the United States. However, interest in buying EVs among Americans has tapered off due to various barriers and concerns. The oversupply of used EVs in the market has led to a decrease in their value, with buyers no longer willing to pay a premium for electric vehicles. Unless there is a catalyst to increase demand, used EV prices are expected to continue declining. Despite these challenges, experts remain optimistic about the growth of the EV market and anticipate ongoing momentum in the industry.