Markets & Business
Used electric vehicle sales climb as new EV market struggles
Cox Automotive reports used EV sales are rising due to expiring leases and high gas prices, even as new EV sales fell some 28% after tax credits were axed.
The market for electric vehicles (EVs) is experiencing a sharp divergence between new and pre-owned models. According to data from Cox Automotive, sales of new EVs fell some 28% year-over-year in the first quarter. This decline followed the Trump administration’s decision to axe the $7,500 consumer tax credit, which had previously supported new purchases. In contrast, the market for used EVs is moving in the opposite direction. Cox Automotive reported that used EV sales increased 12% in the first quarter compared to the same quarter last year. This upward momentum is also visible over the shorter term, as used EV sales popped 17% between the fourth quarter and the first quarter of the year.
This growth in the pre-owned market is being driven by a combination of fuel costs and vehicle supply dynamics. Rising gas prices, with the average price of gas climbing above $4 a gallon, have helped spur consumer interest and sales of electric vehicles. At the same time, an abundance of expiring leases is channeling a steady supply of vehicles into the secondary market. Leases were a popular choice for EV buyers in the early 2020s. As those terms expire, hundreds of thousands of pre-owned EVs are entering the marketplace. The Financial Times reported that EVs will account for 15% of all off-lease vehicles—defined as vehicles returned to the lessor after a lease term—by the end of the year, up from 7.7% in the first quarter.
This influx of supply has altered the pricing dynamics of the secondary market, bringing pre-owned electric models into direct competition with traditional vehicles. Increased supply has helped push used EV prices down, allowing them to reach price parity, or close to it, with gas-powered cars. According to Cox Automotive, the average price of a used EV is $34,821, compared to $33,487 for the equivalent gas-powered vehicle. This narrow price gap has made pre-owned electric options increasingly attractive to buyers seeking affordable alternatives.
Why it matters
The shift highlights how market dynamics like lease cycles and fuel costs can decouple used vehicle demand from the broader new-car market, which remains sensitive to federal policy changes.