The price of used electric vehicles (EVs) has plummeted as their popularity wanes. In fact, compared to used cars of the same model year, EVs are now priced lower.

The Wall Street Journal (WSJ), citing automotive website Edmunds, reported that as of September this year, the average price for a three-year-old used electric vehicle was $28,400, marking a 25% drop compared to early 2023. The WSJ pointed out that during the same period, prices of used gasoline vehicles remained stable, making used EVs cheaper by comparison.

As used EV prices have fallen sharply, electric cars are now among the largest offerings in the used car market. Just two years ago, due to vehicle shortages stemming from the COVID-19 pandemic's impact on supply chains, some used EV models were priced at or even above the cost of new ones. However, the situation has now reversed.

Notably, the prices of popular models from Tesla, the largest EV manufacturer in the U.S., have also dropped significantly. According to Edmunds, used prices for Tesla's most popular models, the Model 3 and Model Y, have decreased by about 25% over the past year.

The dramatic drop in used EV prices is largely due to fierce price competition among manufacturers. In a bid to secure market share, Tesla slashed prices on some models by up to a third starting in 2023, prompting competitors to join the price-cutting race, leading to what some describe as "bleeding sales." In April 2023, Tesla again lowered prices on its major models, reducing the Model Y’s price from $44,990 to $42,990. The base prices of the Model S and Model X were also cut.

Tesla has been at the forefront of price competition in the EV industry, having implemented price cuts in the U.S. last year as well. Due to ongoing reductions, the selling price of the Model Y has dropped by more than 20% compared to two years ago, while the price of the Model 3 has fallen by 11%.

Tesla is fighting to retain its market share in the U.S., even at the expense of profitability.

Analysts point out that the sharp decline in used EV prices could make them more appealing to budget-conscious consumers. However, many current EV owners are experiencing "negative equity," where their loan balance is equal to or higher than the vehicle’s current value.

According to Edmunds, the average monthly payment for an EV lease has dropped from $950 last year to $582 in August. Ivan Drury, Director of Insights at Edmunds, noted that “monthly payments for a $28,000 used EV loan will be about the same.”

The rise in EV leasing could have long-term negative effects on the used car market. While lower lease prices are helping automakers boost EV sales now, in 2-3 years, a flood of used EVs is expected to hit the market.



<Hwandong Cho>