According to data assembled by Cox Automotive the market for used electric vehicles (EVs) in the U.S. is beginning to accelerate rapidly as more used EVs become available and buyers snap them up. The rapid growth of new EV sales in the U.S. has been well documented; Cox Automotive is forecasting sales of new EVs in the U.S. will surpass 1 million units for the first time in 2023. In Q1, EV share of the new-vehicle sales is expected to reach close to 7%, a record high. Used EV sales, however, have lagged the new-vehicle market. That is beginning to change.
“Every new vehicle eventually becomes a used vehicle,” said Jonathan Smoke, chief economist of Cox Automotive. “Our data sets indicate used EV sales will begin increasing rapidly from here, following a clear path set by new sales. In Q1, our team at Manheim processed a record number of used EVs in the wholesale market. This is an approaching challenge for the industry we’ve already begun to embrace, as placing a value on a used EV is a new set of skills we all need to develop and refine.”
The volume of EV transactions at Manheim, the largest wholesale vehicle marketplace in the U.S., is still relatively low but rapidly increasing. Through Q1, Manheim operating locations across the U.S. processed nearly 9,800 used EVs, an increase of 40% from the same period in 2022. (For comparison, Manheim facilitated more than 900,000 wholesale vehicle transactions in Q1). Typically, with each EV, Manheim will inspect the vehicle, provide a condition report for the sale, and establish a value through the open auction process. Through March 2023, according to the Manheim index, wholesale values of used EVs have increased by 3.7% year over year, compared to the overall index decline of 2.4%.
Retail used electric vehicle sales – EVs sold through a licensed dealership – increased significantly in Q1, according to Cox Automotive data, up 32% year over year, to 42,753 units. (Sales volume estimates do not include private-party, consumer-to-consumer sales). Used EV sales in Q1 2023 represent twice the volume sold in Q1 2021.
Last quarter, the average retail listing price for a used EV was around $43,400, a decrease of approximately 4% from Q1 2022 and well below the average new EV price, which is closer to $59,000. The lower average listing price at retail is likely the result of aggressive price cuts at Tesla, the EV market share leader. As the market leader pushes down prices for new EVs, used-vehicle price follow suit.
Having more used EVs in the market is a key driver of the volume gains, and product availability will rapidly increase going forward. In the first quarter of 2022, 167,000 new EVs were sold, according to estimates by Kelley Blue Book. In Q1 2023, initial estimates from KBB suggest EV sales jumped to more than 225,000, with EVs accounting for approximately 7% of new-vehicle sales.