Used car prices have dropped from pandemic highs with used electric vehicles leading the charge.
Data from Edmunds, which determines car values, showed that the average cost for a used Chevy Bolt in 2022 was $25,620; this year the car is averaging $24,104. A used Hyundai Kona EV averaged $33,146 last year, but the price has now dipped to $28,218. Last year, used Tesla Model S cars cost an average of $79,157, but this year they've dropped to $60,137.
With prices down, a used vehicle may seem like a good option, but experts say there are three key things to keep in mind when buying a used EV.
Battery Health
When buying a used EV, experts say having a pre-purchase inspection done by a third party is crucial.
"It is the best $100 to $200 you could ever spend because it's likely going to surface issues," Zach Shefska, CEO of CarEdge, said in an interview with ABC News. "If it doesn't, then you just spent $100 or $200 to make sure you've got a great car."
Shefska calls pre-purchase inspections "critically important" saying they'll reveal the car battery's capacity and degradation. It will also give prospective buyers a sense of how soon that battery may need to be replaced. That's important because according to Consumer Reports, an EV battery replacement can range from $5,000 to $15,000.
An EV charging station in Virginia.
Universal Images Group via Getty Images
A new EV valuation tool launching later this year from Cox Automotive could help prospective EV buyers see a car's battery health online. The company's new tool will score electric cars' overall battery health on a scale of 1-5, with higher scores indicating better batteries.
"I think it's going to be huge to create this transparency in the marketplace," Stephanie Valdez Streaty, director of mobility R&D at Cox Automotive, said about the new product. "You could have two EVs with the same mileage and one that's been driven in really hot weather, been fast charged – that's going to have probably not as good a state of health or battery compared to the one that's been in moderate temperature."
Manufacturer Warranties
In addition to determining the condition of a used EVs battery, experts suggest consumers check if the car is still under warranty, which can cut the cost of replacing the part.
Most manufacturers warranty EV batteries between 8-10 years or from 80,000-150,000 miles – whichever comes first.
"All the consumer has to do is double-check the manufacturer's website. They'll list the warranty," Shefska said. "Another key thing is what's called the in-service date. So imagine you buy a 2020 Tesla – the warranty doesn't start just in 2020 because the model year is 2020 – It starts on the vehicle's in-service date and so the in-service date is when the vehicle is actually sold originally."
Tax Incentives
Consumers can also take advantage of tax incentives when purchasing electric vehicles. While there are not as many incentives for pre-owed EVs as there are for new ones, certain used cars under $25,000 can qualify for a tax credit of up to $4,000.
Tax breaks are one reason experts say it may be worth looking into purchasing a new electric car.
"The reason we're really recommending folks look at new EVs right now is because of those tax incentives and that the battery pack in the vehicle overall is covered by the full manufacturer's warranty versus buying something pre-owned where you know there could be some wear and tear," Shefska said.
For certain new EVs purchased in 2023, the federal government is giving consumers a $7,500 tax credit. Shefska says buyers can even couple that with certain tax credits with manufacturer's incentives.
"For example, we've seen deals on the Jeep Wranglers 4EX with as much as $14,000 in incentives and $7500 from the federal government," Shefska said. "We're talking about 20-plus percent off on a new car. Those are deals worth looking at."
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