After reaching record levels in 2022, used car prices have fallen across most vehicle types. Electric vehicles (EVs) and hybrids are among the best used car deals available.
According to the Carfax Used Car Price Index, used EV and hybrid prices declined 22.1% year-over-year in August. Used EVs are now more affordable than ever, and many electric cars and SUVs are selling for below $30,000. If you have considered an EV, the choice makes more sense now than ever before.
There is a lot to keep in mind before buying a used EV. Let’s look at how to do some homework to find the best EV for your needs at the most affordable price.
Consider the Used EV Tax Credits
The Inflation Reduction Act introduced a new federal used electric vehicle tax credit, but not all EVs qualify. The used EV tax credit is worth 30% of the used car sales price, up to $4,000, on cars purchased after December 31, 2022. Keep in mind that if you buy a used EV for less than $13,333, it won’t qualify for the full $4,000 tax credit.
For a vehicle to be eligible:
- You must buy it from a licensed dealer
- It must be priced at or below $25,000
- It must be purchased for primary use in the United States
- Be a model older than two years before the purchase
In addition to the vehicle requirements, the buyer must qualify for the used EV tax credit based on their intended use and income:
- The EV must be purchased for use, not for resale
- To prevent fraudulent purchases, the buyer cannot be the EV’s original owner
- The buyer cannot be claimed as a dependent on someone else’s tax return
- The buyer cannot have claimed another used clean vehicle credit in the previous three years
- The buyer’s modified adjusted gross income (AGI) cannot exceed $150,000 if married and filing jointly, $112,500 if married and filing jointly, or $75,000 for all other filers
It’s helpful to speak with a tax expert to determine if you qualify for the used EV tax credit.
Research State EV Rebates & Tax Incentives
In addition to the federal EV tax credits, some states and even cities now offer new or used EV incentives. For example, Massachusetts offers a $3,500 incentive to new and used EV buyers, along with an additional $,1500 for low-income purchasers. The Los Angeles Department of Water and Power offers up to $1,500 in rebates for used EV buyers.
Clean energy incentives and tax credits programs vary widely by jurisdiction. You may be required to buy the vehicle from an approved dealer or meet income qualifications to get additional tax credits.
The Database of State Incentives for Renewable Energy (DSIRE) is an excellent source of state-specific clean energy incentives, not just for vehicles but also home and business energy efficiency upgrades. In addition, some dealerships may be helpful, but they may not be knowledgeable about state EV rebates and tax deductions.
There are several useful steps to take to find a used EV you can love and trust.
Decide How Much EV Range You Need
Your range needs will vary depending on how far you tend to drive and how easily you can charge your EV. You probably don’t need a huge vehicle range if you primarily drive locally and can charge at home or work.
Many short-range EVs are well suited to most people’s daily needs. The average American drives about 40 miles per day, according to the Bureau of Transportation Statistics.
When shopping for a used EV, determine the EPA-rated range of the model you are considering. Battery range usually declines by between 2% and 3% annually. If you buy a used Hyundai Kona Electric or a Bolt EV that had an original battery range of 258 or 259 miles, the actual range after five years might be between 225 or 230 miles. Also, if you live in a cold climate, remember that EV battery range decreases by as much as 20% in cold weather, according to Consumer Reports.
If you have EV range anxiety, explore models with longer ranges, including:
- BMW i4
- Cadillac Lyriq
- Chevy Bolt EV, Chevy Bolt EUV
- Ford Mustang Mach-e
- Hyundai Kona Electric, Hyundai Ioniq 5, Hyundai Ioniq 6
- Kia Niro EV
- Polestar 2
- Tesla Model Y, Tesla Model X, Tesla Model S
Check EV Battery Health
Many EV shoppers are concerned about battery health because it impacts vehicle range. As battery technology improves, the loss of storage capacity is less of an issue. According to Electrek, “The average decline in energy storage is 2.3% per year. For a 150-mile EV, you’re likely to lose 17 miles of accessible range after five years.”
Many EVs include diagnostic software that provides information on the condition of the battery on the battery indicator on the dashboard display. An easy approach is to check the dashboard for the estimated range when the battery is fully charged and compare it to the original manufacturer range to see if it has lost capacity. For the more technically inclined, there are devices that plug into the OBT port that assess battery health — ask the dealer to provide you with a detailed report, if available.
Some EV manufacturers have recalled batteries, which can be a benefit to used buyers. A recall means the battery in updated vehicles is newer than the model year of the vehicle. Certain Hyundai Kona Electric and Chevy Bolt vehicles had EV battery recalls.
Understand the EV Battery Warranties
Most EV manufacturers offer a battery warranty of at least eight to 10 years or 100,000 miles, whichever comes first. Because the EV battery is such an expensive component, the warranties offer peace of mind.
Remember that the warranty may not be transferable to a new owner. Read the fine print in the warranty before purchasing a used EV because the details and exclusions vary by manufacturer.
Consider Buying or Leasing a New EV
Depending on the EV model you want and available the incentives, there might not be a large price difference between new and used vehicles. Like used EV prices, new EV prices have also decreased compared to 2022, and several new EVs are available for under $40,000.
Many new EVs are eligible for a $7,500 tax credit in addition to state incentives. Also, some automakers with models that don’t qualify for the new EV tax credit can take advantage of a loophole by offering a $7,500 discount for leasing an EV.
Now Is a Good Time To Buy an EV
The prices of new and used EVs have fallen, making them affordable for more drivers. But it’s helpful to conduct some research to find the best used car deal. Check if you qualify for EV tax credits and incentives, decide how much vehicle range you need, and research the health of the EV battery. You’ll be happy when you drive that silent, fast electric car off the lot.