Electric Vehicle Prices Continue to Plummet as Market Demand Shifts
In the past year, the prices of second-hand electric vehicles have experienced a significant decline as the auto industry adjusts to meet consumer demand. While electric vehicles are rapidly approaching price parity with traditional combustion engine vehicles, they have not yet been eclipsed by more affordable alternatives.
The electric vehicle market has been characterized by instability for more than a year, with the average price of a used electric vehicle being 60% higher than that of the average used car in October 2022, according to data from iSeeCars. During that period, the typical used electric vehicle carried a price tag of $52,821, while the average used car was priced at $32,627.
However, electric vehicles have only recently registered significant drops in sales volume. This downward trend in sales has been seen particularly with Tesla, which has repeatedly lowered prices in an effort to avoid declining sales. Similarly, the Porsche Taycan has also experienced a decline in sales for the second consecutive year. Factors attributed to this decline in demand include elevated prices after the COVID-19 lockdown, confusing incentives for electric vehicles, and market saturation, as automakers are finally catching up with the demand for electric vehicles.
Data from iSeeCars paints a clear picture of the impact of declining demand on the used electric vehicle market. Using statistics from 2.3 million used car sales from one to five years old, iSeeCars found that since October 2022, used electric vehicle prices have decreased by 33.7% on average, to an average price of $34,994. In comparison, the rest of the market averaged $30,972, with used car prices declining by 5.1% on average. Hybrids experienced an even steeper drop of 9.6%.
While this price drop can be attributed to declining demand, another important metric to consider is the market day supply, which measures how long a vehicle is expected to remain on the lot before being sold. Last October, electric vehicles were reported to have a market day supply of 37.5, indicating high demand and easy sales.
However, an explanation for the marginally longer market day supply of electric vehicles can be found in iSeeCars data for the 10 lowest-selling used cars, which show that big depreciators like Maseratis and Infinitis make up a large part of it. Among them are three electric vehicles: the Ford F-150 Lightning, Kia EV6, and Polestar 2. These vehicles, which sell for above the average price of a used EV, remain in short supply in many markets, with long waiting lists, allowing dealers to maintain higher prices and justify keeping them on the lot longer.
Additionally, Tesla’s influence on the electric vehicle market cannot be overlooked. As the largest volume seller in the market, Tesla has repeatedly cut prices to counter falling demand, thereby directly depressing used prices. This has resulted in a significant drop in prices, with used Tesla models seeing reductions ranging from $15,000 to over $22,000.
As the recovery in new car supply eases pressure on the used market, all used vehicles are selling more slowly and at lower prices than a year ago. Concurrently, new demand for electric vehicles has stalled, entering what some refer to as an “abyss,” prompting OEMs to delay the increase in production of electric vehicles.
Despite all the buzz about electric vehicles replacing other vehicle types, they remain luxury goods for a limited demographic of the overall car market. While this scenario could change as battery supply and charger availability increase, the willingness and ability of consumers to make the leap will ultimately determine the direction of EV sales.
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