The market for used electric vehicles was an ailing buyers' market early on in 2021. Over the past 60 days, however, the tide has turned and the average price of used electric cars has skyrocketed.
From March to May, the average used EV price for all model years jumped $1,500, and pre-2019 models are up by $1,200, according to Recurrent, which plans to harness battery health reports and be something akin to Carfax for EVs. And J.D. Power recently noted that used-vehicle retail prices rose 10% from the end of 2020 to April, with wholesale prices jumping 32%.
What’s going on? The trend isn’t exclusive to EVs, and it’s part of a surge affecting the entire used-vehicle market—and driven by new-vehicle supply issues. Factors include a flat-out shortage of new cars (yes, that chip shortage), economic stimulus and recovery money reaching family bank accounts, and vaccinated Americans upgrading their vehicles in preparation for summer road trips, new commutes, and a return to something approaching normal life.
Short version: Demand is exceeding supply.
2021 Ford Mustang Mach-E
According to Cox Automotive, sales of electrified vehicles are far outpacing those of the whole market—jumping from 4.8% of the market in the first quarter of 2020 to 7.8% in the same period of 2021. The Tesla Model Y, Tesla Model 3, Chevrolet Bolt EV, and Ford Mustang Mach-E were the top-selling new EVs for the quarter in the U.S., and the combined sales of hybrid and plug-in hybrid models more than doubled.
That strong new-EV market, choked by supply issues, has now reached used EVs. On the used car market as a whole, retail supply is at just 29 days—measured in days in inventory—compared to a norm of 44 days, according to Cox Automotive. But it’s even considerably shorter than that for some EVs.
2018 Chevrolet Bolt EV
It’s led to some surprising run-ups. The average price of the 2018 Chevrolet Bolt EV has risen $2,735—despite continued discounts on the Bolt EV, as well as a safety recall over fire concerns that’s left owners only able to charge to 90%. Meanwhile the Chevy Volt plug-in hybrid of the same year has risen $3,827; 2018 Nissan Leaf prices have increased by $1,591, on average; and those of the 2017 VW E-Golf have gone up by $1,778.
2019 Nissan Leaf
"From a dealer perspective, it is an ‘anything buy’ market for EVs right now.," said Recurrent CEO Scott Case to Green Car Reports. "Supply of new vehicles is so limited due to global chip shortages that dealers are paying top dollar for used EV trade-ins, especially when sellers can prove their battery is in good shape.”
According to Recurrent's market report for May, the EV lingering the longest in inventory is the 2018 BMW i3. And the Tesla Model 3 is rarely long in inventories, as one of the hottest commodities on the used-car lot.
Pricing variability by state - Recurrent report, May 2021
Another thing Recurrent noted was incredible price variability (and volatility) with differences of $3,000 to $6,000 in some cases across state lines.
It found Texas as the cheapest place to buy a used Tesla Model 3. It reported Washington State is a good place to buy a used Nissan Leaf, but there were no used (2019) Audi E-Tron SUVs left on the market. Florida is a hot market for the BMW i3 and BMW’s plug-in hybrids. And overall, the average price of those models is a bit cheaper than average in California—perhaps due to their abundance.
How long will the used EV market keep cooking and supply catch up with demand? The new vehicle market needs to build back inventories first, which will take many months. And if the federal government approves some new incentives that boost EV ownership, the stronger market is probably here to stay.