Used EVs have never been cheaper. But are they a good deal?

The deals on used electric vehicles right now are shocking.

In 2017, a brand-new Nissan Leaf carried a price tag of about $35,000; today, that same car is yours for less than $6,500. This story repeats across the market. A Hyundai Kona that rolled off the showroom floor in 2021 for more than $43,000 has fallen below $16,000. Even newer models aren’t spared from this kind of depreciation. Take the 2024 Hyundai Ioniq 5: it debuted with a sticker close to $62,000, but after 8,000 miles and less than 12 months on the road, at least one is selling for around $37,000. The drops are even starker in the luxury segment. An Audi e-Tron GT supercar that cost about $124,000 just three years ago is now offered at $52,000. All of this is before government incentives that could bring costs even lower.

In August, plummeting prices sparked a 59 percent year-over-year surge in used EV sales, according to the research firm Cox Automotive. But the trend also begs the question whether even well-priced used EVs are a bad investment in an asset that will continue to depreciate at an alarming rate. Experts say that depends on the car, and on how the buyer would use it.

“I would buy one now,” said Stephanie Valdez Streaty, director of industry insights at Cox Automotive. In August, used electric cars typically cost about $900 more than similar gas-powered ones, she added, which is the lowest gap on record. It’s a premium that is likely easily made up in gas savings and far lower maintenance costs because an EV won’t need, say, oil changes. “There’s a really strong value proposition to buying a used EV,” Valdez Streaty said.

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But even a deep discount may not be enough for some people to shake off their earlier experiences, or perceptions, about electric cars, said John Helveston, an engineer and professor at George Washington University who studies technology adoption. As he put it, “If you bought a used Leaf even a few years ago, your experience was likely not great.”

That’s because until recently, batteries often deteriorated rapidly, which led to untenable driving ranges and often regrettable purchases. But Helveston said the landscape has changed dramatically, with a trend toward more efficient technologies and bigger packs that don’t degrade as fast. Still, most warranties only kick in once the capacity has fallen below 70 percent. So, Helveston said, the car’s original range remains critical and is one of the best indications of how quickly it might depreciate.

“If you’re sub-200 miles as your new starting range, they don’t hold their value very well,” he said. Conversely, that’s why Teslas — with ranges in the 300- or 400-mile realm — have historically depreciated considerably more slowly.

Although research by Helveston and others has shown that EVs depreciate much more quickly than gas-powered vehicles in the first two to three years, the good news is that after that the rates of decline converge and all cars lose value at a similar pace.

Incentives are another factor to consider. Right now an income-qualified buyer can get up to $4,000 federal tax credit on a used EV costing under $25,000 or as much as $7,500 for a new one. Many states, municipalities, and utilities offer rebates as well. But the federal credits go away at the end of month, which could cause electric car prices to inch upward. On the other hand, a loophole in those incentives led to a glut of leased electric vehicles — more than a million of which are set to hit the used market within the next few years, which could exert downward pressure on prices. It’s unclear how all those elements will interact.

“There’s no crystal ball on this,” said Kevin Roberts, director of economic and market intelligence at the website CarGurus, via e-mail. “But given recent trends, we don’t expect to see the price volatility in used EVs that we’ve seen in the past.”

The bad news is that shopping for used EVs can be a bit of black box.

“With a gas car, between age and mileage you know a lot about that car. In the EV, people have no clue,” said Helveston. Battery health, he explained, is more linked to how the car was used than its age or mileage. If, for example, an owner only used super-fast Level 3 chargers, the battery would take much more of a beating than someone who primarily charged in their garage. Plus, even with recent improvements in battery tech, it’s still hard to predict exactly how a battery will perform five or 10 years out.

“There is this huge gap of information and because of that there’s a hesitance to buy it,” said Helveston. There are, however, some things people can do to mitigate those concerns. The first is to ask the dealer or seller to charge a car to 100 percent capacity before the test drive. Then compare the range on the dashboard to the manufacturer’s stated figure when the car was new. That should provide a rough approximation of remaining battery capacity. After a few years, the pack should retain 90 to 95 percent of its rating.

Valdez Streaty said that it’s not uncommon for dealers to either not have or not know how to access battery health information, though that process may become more standardized in coming years. In the meantime, she said, the used car auction that Cox operates — Manheim — rates batteries on a scale of 1 to 100. It’s the largest auction network in North America and is used by many dealers, which may be able to pass along any information they receive about the battery.

“Definitely you want something that’s going to be above 80 percent,” she said.

The other option is to ignore range or depreciation and buy the cheapest car possible and drive it into the ground. This works well for people who only need a car for around town — most people don’t drive more than 40 miles a day — and don’t care about features. This is what Helveston did when he bought a 10-year-old Leaf off Facebook Marketplace for $5,000. It had a remaining range of just 60 miles, but he drives no more than 30 per day.

“The miles are double what I need,” he said, and he doesn’t have to pay for gas or oil changes, either. “If it dies on me, I only invested five grand in it and I’ll buy another one.”

This article originally appeared in Grist at https://grist.org/economics/used-evs-have-never-been-cheaper-but-are-they-a-good-deal/.

Grist is a nonprofit, independent media organization dedicated to telling stories of climate solutions and a just future. Learn more at Grist.org