Driven by rising gasoline prices and a wave of expiring leases, the used electric vehicle market is experiencing robust growth.
While new EV sales have declined sharply due to the cancellation of the federal tax credit, the used market tells a very different story. According to Cox Automotive, used EV sales rose 12% year-over-year in the first quarter and jumped 17% from the previous quarter, showing strong momentum.
One major factor is the return of gasoline prices above $4 per gallon, which makes EVs more cost-effective to operate. Međutim, an even more critical factor lies on the supply side. As reported by the Financial Times, a large number of consumers who leased EVs in the early 2020s are now seeing those leases expire, flooding the market with hundreds of thousands of pre-owned EVs. In the first quarter alone, off-lease EVs accounted for 7.7% of all off-lease vehicles, a share expected to double to 15% by the end of the year.
The surge in supply has also pushed down prices for used EVs. The average price of a used EV currently stands at $34,821, roughly on par with the $33,487 average for a comparable gasoline-powered vehicle. This price parity has further boosted consumer demand, creating a virtuous cycle of supply and demand.
Ukratko, rising gas prices act as a catalyst, but the wave of expiring leases is the deeper structural factor driving the market. With prices approaching those of conventional cars and more options available, used EVs are increasingly becoming a practical choice for budget-conscious consumers.