As the supply of used models goes up, the prices are going down
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It looks as if used electric vehicles are about to play a major role in the state’s EV transition.
Last winter, selling used EVs was a hard slog for auto dealers, mainly because there were hardly any vehicles to sell. But today, the supply of used EVs is rising and prices are falling, while many consumers are taking advantage of hefty federal and state subsidies for used EVs.
It all adds up to one thing: Getting more electric vehicles on the road.
“Last year it was much more of a struggle to get cars,” said Jeffrey Mann, sales manager of Eco Auto in Tewksbury, which sells used EVs and hybrids. The dealership had to purchase EVs from as far away as Florida and Chicago to build up its inventory. But these days, “there definitely is a lot more inventory,” Mann said.
He adds that the used EVs are selling quickly. So far in February the dealership has already sold 36 of them.
“We’re on track to do 50 or more this month,” Mann said. “Some cars have a shelf life of days.”
Guy Bedau, electric vehicle ambassador at Milford Nissan in Milford, sold a total of 11 used EVs in 2022, because he couldn’t find enough cars to sell. But he’s already sold six EVs this year. There are six more on the lot, and he expects to move them all in 30 days or less. Getting inventory is “easier now than it was six months ago,” Bedau said.
Industry research firm Cox Automotive says that nationwide used EV sales in January rose 69 percent year over year, and that dealers have on average a 47-day supply of used EVs, down from 65 days in the fourth quarter of 2023. So, sales of used EVs are strong enough to keep retail inventories low. This contrasts with the widely reported glut of new EVs. According to Cox, dealers had a 113-day inventory of unsold new EVs at the end of 2023.
Tesla gets a lot of the credit for the increase in used inventory. For one thing, early purchasers of the carmaker’s Model 3 and Model Y are starting to trade them in, said Scott Case, chief executive of Recurrent, a research firm that tracks the used EV market. As a result of this greater supply, “used Tesla prices have dropped by nearly 50 percent in the last 18 months,” said Case.
There’s also the surprise announcement by auto rental giant Hertz that it will sell off 20,000 of its Tesla fleet over the next year. And Tesla is making aggressive price cuts on its new vehicles to protect its market share.
“When you drop the price of new Teslas, which make up the bulk of the EV market, you drop the price of used Teslas,” said Karl Brauer, executive analyst at auto research website. ISeeCars.com. “Elon caused a domino effect throughout the used and new EV market.”
Then there’s all the federal and state money waiting for buyers of used EVs. A federal tax credit of up to $4,000 is available for cars with a value of less than $25,000. And starting this year, dealers can apply the credit immediately to the purchase price of the car. Massachusetts offers a $3,500 credit for cars priced less than $40,000. To qualify, eligible households with spouses who file their taxes jointly must have an adjusted gross income of no more than $150,000. Heads of household must earn less than $112,500 and individual filers less than $75,000.
The state credits are also available to households that are eligible for a variety of low-income assistance programs. In addition, local utilities Eversource and National Grid offer rebates of up to $700 to cover the cost of installing a Level 2 EV charger at a single-family home.
Eric Scorcia of Newburyport already owned an electric Ford Mustang Mach-E when he decided to buy a second EV last year.
“I’d been watching the used market since early August,” Scorcia said. “In December the used prices were really low,” particularly on a 2020 Chevrolet Bolt. With only 20,000 miles on the vehicle, it carried a sticker price of $14,000. After all the rebates and including taxes, registration, and fees, Scorcia paid just $9,500 for the car.
“It’s been great,” Scorcia said. “Almost two months we’ve had it, and it’s worked exactly as we expected.”
Cashing in on the federal tax credit can be a stumbling block, however. Car dealers must submit paperwork to the federal government to allow them to apply the money directly to the purchase price of a new or used EV. But according to Recurrent, as of January only 7 percent of US auto dealers had applied to participate. Customers at nonparticipating dealers must wait for their money until next year’s income tax refund check.
Meanwhile, Brauer of ISeeCars.com disputes Cox Automotive’s say that the used EV market is growing fast. His own research estimates there’s actually a 65-day backlog, rather than 47 days. That would mean the increased supply of used EVs is starting to stack up at dealers. To Brauer, this is a sign of sluggish demand for electric cars in general.
“Everything we can see suggests, let’s reassess the EV transition,” Brauer said.
But Eco Auto’s Mann insists his sales figures tell a different story.
“We’ve only been in business a year and a half, and we’re doing 50 cars a month,” Mann said. “I had no idea that we’d be where where we are in such a short amount of time.”
Hiawatha Bray can be reached at hiawatha.bray@globe.com. Follow him @GlobeTechLab.
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February 23, 2024 at 09:22PM
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Are EV sales slowing? Falling prices give a jolt to used electric car market. - The Boston Globe
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