The news that prices of used electric vehicles are in freefall, with no end in sight, has dragged down revenue through the entire used car segment, says iSeeCars executive analyst Karl Brauer. Plus, the shift has cut into car dealers' profits and lowered consumers' trade-in values.
iSeeCars’ analysis of 1.8 million one- to-five-year-old used cars shows pricing stabilizing with a 3.6% year-over-year drop in June. Yet prices for used EVs dropped at a rate eight times higher – 29.5% in June 2023 compared to one year earlier (See chart, below left).
“We know prices are coming down (across all automotive retail markets), but they’re not dropping like stones,” Brauer tells Wards of his surprise at the decrease in used EV prices. “Used EVs make up a tiny percentage (of the market), but we wanted to know how much of the used-car market (price decreases) were dragged down by EV prices alone. When we saw this, we said it’s time to report that used-car prices are fairly stable, but used EV car prices are in freefall.”
Brauer says major job layoffs, employment uncertainty, increased interest rates and higher prices for food, utilities and other necessities are among the economic factors that have dissuaded consumers from buying EVs.
Plus, gas prices in the $3-$4 range throughout much of the U.S. have dampened the enthusiasm for alternative fuel-powered vehicles.
But there are less subjective factors for the stagnant sales.
“Market share is very slow in states that already have a lot of the EV market share,” says Brauer. “In other words, Washington, California and Oregon are three of the highest states with EV market share and the slowest states in growing their EV market share.”
EVs’ market share in those states is between 7% to 10%, says Brauer. That brings into question how the U.S. will meet the Biden Admin.’s goal of electric vehicles comprising 67% of car sales in 2032.
“There is a threshold of between 7% and 10% where it starts to become very difficult to keep growing EV sales and market share,” says Brauer, noting EV leader Tesla’s price reductions on the Model 3 and Model X. “(Economic factors) are hurting every (market), but it’s very disproportionately hurting EVs.”
Despite the market’s overall pricing trend, not all used cars are dropping in value. Several premium models, along with the Chevrolet Suburban and Nissan Frontier, have gone up in value from June of 2022, confirming ongoing demand for performance models, SUVs, and trucks, reports iSeeCars.
