Bloomberg recently reported that the US has hit a tipping point in EV sales by reaching 5% of new car sales. With unstable and high gas prices, plus talks about inflation and recession, Recurrent is seeing record levels of interest in used EVs, making our theme for this quarter the clear and quantifiable maturation of the used EV market

Carbuyer interest in used EVs is relatively new. In the summer of 2021, Recurrent surveys found that just over 50% of EV shoppers would be interested in purchasing a used electric car while, a year later in the summer of 2022, an updated survey put that number closer to 80%. 

As the demand for used electric cars grows, here are the key trends for the rest of the year. While occasionally interconnected, each is also a fascinating story by itself.

Unavailability of new EVs is driving used EV demand (and prices)

This summer a Consumer Reports study found that 14% of American drivers say they would “definitely” buy or lease a battery-electric vehicle today – more than three times the 4% who said the same in 2020. The question now is not if they want an EV, but rather how to find one.

The inaccessibility of semiconductors and battery parts has had significant economic ramifications for the auto industry. While many car companies are trying to shorten the supply line by bringing some of the manufacturing process closer to home, it will be a few years until new facilities can fully meet the needs. 

In the meantime, long waitlists for popular EV models leave many new car shoppers looking at the second hand market. These shoppers are willing to pay for a new EV, so their price point tends to be higher than other used car shoppers. This trend in particular drives up demand for used cars in “like new” condition – and shoots up prices across the board. You can see in our used EV pricing chart below, the highest increase is for a 2022 Ford Mustang Mach-E. 

Used EV prices continuing to rise in 2022 compared to national electric car trends

Recurrent calculates price trends using a fixed bundle of used EVs so we can compare the same models each month. Our bundle price includes these vehicles and model years.

A new indicator of wild growth in the used EV market is that price increases for used EVs are now beating the consumer price index increases for all cars. While the Bureau of Labor Statistics tracked a 16.1% price increase in all used cars from May 2021 to May 2022, the price increase in the Recurrent bundle rose 18%. From June 2021 to June 2022, all used cars rose 7.1%, compared to 9.7% for used EVs. 

We don’t know if these price increases are primarily due to outsized demand for EVs or indicate that EVs hold their value better than traditional gas cars – it all depends on how long this trend persists. However, with perks such as over-the-air updates and far less mechanical wear, we may see that EVs depreciate less than their combustion cousins. 

Low depreciation is certainly a short term side effect of demand and price inflation. Cars are actually increasing in value after being owned for six months or a year. This has led to car flipping, and a glut of “like new” used cars that are available to meet the demand of impatient new EV shoppers. 

Price hikes in new cars give rise to “car flipping” 

For the reasons above, there is new pressure on the used car market to supply EVs – the newer, the better. Normally, you would expect the used market to be predominantly models that are 3-4 years old, meaning that 2018 and 2019 models should be the bulk of what’s for sale. 

Starting late last year, 2021 model year owners found that they could resell their relatively new EV for much more than they paid, “flipping” their car in the same way people flip houses. People who are savvy at predicting market trends bought up new vehicles then resold them with barely any miles. The first new-car buyers get the tax incentives and financing deals, but the second-hand shoppers get the car today, ahead of the long waitlists. This practice became so popular this past winter that in some months, there were more 2021 models in the used market than 2019’s, and a growing percentage of 2022 model years in used inventory.

Used EV inventory fluctuations in the US

Tesla is an interesting example because the price of a new model has increased so much last year that it created built-in inflation in used prices. Add extremely long waiting periods for new vehicles, and the value of used cars skyrocketed. For example, the MSRP for a base trim Tesla Model 3 in April 2021 was $39,000. If you were lucky enough to have bought one back then, you would have seen the value of your car appreciate between $10,000 and $16,000 in one year, with a $19,000 increase as of July 2022.  

Another car that has seen incredible price increases is the 2022 Ford Mustang Mach-E. The second hand price is now over $70,000, up 28% from January 2022. The top tier MSRP for a new 2022 GT trim was less than this – $66,000 – and was eligible for the $7,500 federal tax credit. That means someone who bought a new Mach-E in late 2021 could have resold it for a profit of $10,000 to $20,000 in a matter of months. 

For further evidence that car flippers are having a great year, look at actual selling prices for the Rivian R1T Launch Edition below. As a reminder, the MSRP for the Launch Edition was between $73,000 and $95,000, depending on when you reserved it and its add-ons.

Used Rivian prices in 2022

However, it seems like car manufacturers are getting wise to this practice and are cracking down. Ford has a one-year “no resale” clause on its F-150 Lightning, supposedly prompted by their dealerships. Similarly, Tesla reserves the right to cancel any order that the carmaker believes will be resold. Both companies have also ended their lease buyout programs, although with Ford, it is just for electric cars.  

Americans want big cars regardless of fuel type

Even if you’re not intentionally flipping a car, the lease term for most vehicles is 36 months, and most new cars are sold every 3-4 years. EVs from 2018 and 2019 are second generation models with robust batteries, amenities beyond environmentalism, and used ranges that exceed 200 miles. However, drivers aren’t as excited about these available used EVs as they are about the wave of electric SUVs and trucks. 

Look at the general auto trends in the country: the best selling models are overwhelmingly trucks and SUVs, which make up 80% of the top ten list. The Ford F-150 has been at the top selling car for over 40 years, but it took until 2022 to electrify it. Similarly, the Tesla Model Y, which is a crossover SUV, is now the best selling EV. It was first released in 2020, but it has been increasingly found in used EV inventory over the past months as demand soars. We’ve reported before on the Model 3 takeover - is the Model Y next?

In fact, the preorder numbers that we are seeing for trucks and SUVs in America eclipse the lifetime sales figures for many older EV models. For instance, more people have preordered the Ford F-150 than all LEAFs ever sold in the US. In the chart below, we show comparisons between cumulative sales numbers for popular EVs through 2021, versus single year sales of the Model Y in 2021 and EV truck preorders.

Electric truck and EV SUV sales in the US

For more context, here are the top 5 best selling cars in the US in 2021:

  1. Ford F-Series: 726,004
  2. Dodge Ram: 569,388
  3. Chevy Silverado: 529,765
  4. Toyota RAV4: 407,739
  5. Honda CR-V: 361,271

Right now, the limiting factor in sales figures for EVs with popular body styles - e.g. Model Y, RAV4 Prime, Mach-E - is supply. While automakers will inevitably increase production to meet demand, it will likely take years. And in the meantime, reservations offer a new way for auto manufacturers to gauge interest in upcoming vehicles. 

Reservation system shows the gap between supply and demand

During the beginning of the pandemic, auto production and new vehicle orders were suspended as everyone braced for car shopping to halt. Instead, consumer demand for cars rebounded faster than expected. Dealerships no longer had vehicle inventory on their lots, and shoppers had to order their cars from manufacturers. However, the unexpected demand for new EVs has left many companies with wait times of a year or more. 

For instance, the wait times for some popular models are below:

  • Tesla Model Y
  • F-150 Lightning
  • Rivian R1T
  • Toyota RAV4 Prime
  • Hyundai Ioniq 5
  • Jan - April 2023 for Long Range; August - October 2022 for Performance
  • 2023 models scheduled to begin delivery in October 2022 but order list is not yet open and 2022 reservations are still backlogged
  • Late 2023, with possible opportunity to buy a pre-existing configuration earlier
  • 1-3 years depending on configuration and location
  • Limited availability in stock, custom builds not available (see below)
This is the only Ioniq 5 available within 50 miles of Westchester, New York. 

What should you do if you really want your new EV now? First off, look at the used inventory – you may be able to find a great car, even if it’s an older model or not the SUV you were hoping to own. Secondly, being flexible about trim level, color,  and accessories might bump you up in the line. Our own Andrew Garberson recently got his Rivian R1T a year earlier than expected. 

"My Rivian R1T delivery was scheduled for Fall 2023. In May, I was told that because of the vehicle options that I selected, which matched perfectly with their production priorities, my R1T would be ready much sooner. The new truck was in my driveway less than a month later, and more than a year earlier than expected."

Buy now or wait?

What do all these trends mean? EV prices won’t drop anytime soon, and it can take at least 18 months until production backlogs are cleared and new facilities have come online. So, if you’re waiting in line for the EV of your dreams, or ready to make the switch, there may not be a better time in the near future. With interest rates increasing – including manufacturer lease program rates – your money may go further today. Restrictions on lease buyouts and vehicle resale also mean that the supply of secondhand EVs will be further restricted in coming years. But, the good news is that this ongoing supply crunch will ensure the EV you get today will hold its value long enough to sell or trade it in, especially if you take care of the battery

If you're looking for a new-to-you EV, find resources such as Best EV Hatchbacks and Best Used Electric Cars under $25K

About Recurrent and this report

We partner with Marketcheck, a vehicle inventory data provider, to provide this insight into the pre-owned EV market. Our analysis is updated each quarter. 

Recurrent offers wellness reports to EV owners, condition reports for EV buyers, and bulk reports for EV sellers. The team of battery scientists also produces a variety of other educational resources.

If you are new to owning an electric car, check out the EV range and battery degradation e-book that we created as an introduction.