Electric car prices have fallen off of a cliff. Depending on your stance in the market, this could be great news, or far from it. Since September 2022, the average used electric car price has tumbled from $63,069 to $33,645. That is a 47% loss of value in a little over a year and a half.
At the same time, used internal combustion engine vehicles have seen their prices decline too. Since September of 2022, used cars powered by internal combustion engines have seen their average price decline from $34,000 to $32,000. This 6% loss in value over 18 months is more like what we would expect.
A closer look at some EVs for sale today reveals that a 47% drop in value would actually be a better scenario, believe it or not. Should EV buyers consider this drastic drop in value to be a good or bad sign? We’ll get into that too.
EV Depreciation Shock: Popular EVs Lose Half Their Value Instantly
The actual value of new electric cars is significantly lower than their starting MSRPs. Take for example this BMW i4 that is currently for sale. The manufacturers suggested retail price is $64,740. The CarEdge Target Discount from the dealer is 8% off of MSRP which is a price of $59,561.
What happens when you plug this vehicle into CarEdge.com/sell and receive instant cash offers? With just 500 miles entered on the odometer, the highest cash offer is $28,370 from CarGurus.
That is an astounding 56% loss of value the moment you drive the car off the lot!
Things get even worse when you look at the Mercedes-Benz EQS. This 2023 Mercedes-Benz EQS has a manufacturers suggested retail price of $156,170. The CarEdge Target Discount is 15% off of MSRP, leading to a selling price of $132,745. 15% off of a Mercedes seems like an excellent deal! Until …
When you plug this vehicle into CarEdge.com/Sell with 500 miles you get an instant cash offer of $67,000. Again, a 57% loss in value.
Even Ford’s Big Discounts Aren’t Enough…
When Ford launched their flagship ‘Tesla-killer’ EV in 2021, nearly infinite demand was expected by Ford’s leadership. “It’s hard to produce Mustang Mach-Es fast enough to meet the incredible demand, but we are sure going to try,” said Ford CEO Jim Farley at the time.
How times have changed. From boasting production targets of 200,000 copies by 2023, to struggling to sell last year’s inventory even today, Ford EV sales have not lived up to their corporate expectations.
The good news for buyers is that great deals can be had on a new Mustang Mach-E. But is it enough to lift buyers out of negative equity from day one?
Let’s take a look at an example from the CarEdge Community.
This new 2022 Mustang Mach-E was STILL on the dealer lot in early 2024. In fact, about 100 new 2022s remain across the nation. With a $27,000 discount, surely it’s a steal, right? Not so fast…
Here’s how much online car buyers would pay for that exact car, the moment it is driven off of the lot…
That’s right, a 48% drop in market value from day one. Although this was a 2022 model, roughly two-thirds of all new Mustang Mach-Es on dealer lots today are leftovers from 2023. No one should be paying MSRP for last year’s cars in spring or summer of 2024. See how low prices are near you.
What This Means For Buyers
Lower selling prices is welcome news for EV buyers, but with a few VERY important caveats.
Advice For New EV Buyers
The only folks who should be buying new EVs right now are those who plan to keep them for a long time. Otherwise, buying an EV is a very risky financial decision if there’s a chance you’ll be looking to sell anytime soon.
Unless a hefty down payment or trade-in is made, buying a new EV in 2024 puts buyers at significant risk of becoming ‘underwater’ on their car loan. This means that your car is worth less than you owe on the loan (learn more here). It’s a situation you want to avoid, no matter what.
Leasing an EV is another great option, and there are some great EV lease offers out there today. Plus, leasing is a low-stress way of trying out the EV lifestyle for the first time.
Advice For Used EV Buyers
This is where the EV depreciation crisis turns into good news for some. If you’re open to buying a used electric car, the shocking depreciation of today’s new models is in your favor. Previously, EV buyers had to decide between the benefit of the federal EV tax credit (available only on select models), or somewhat lower prices on the used market. Today, that’s no longer the case.
In 2024, the price gap between new and used EVs couldn’t be more clear. The savings that come along with a used EV are no match for even the most generous of new EV incentives. With new tools like Recurrent Auto, you can even check a used electric car’s battery health before buying.
Used EV buyers can take advantage of rapid depreciation to score a sweet deal on any used EV, from Tesla to Ford and everything in between.
👉 See for yourself with these Local Used EV Listings
Don’t Go It Alone
In 2024’s changing EV market, there are more reasons than ever to equip yourself with car buying know-how. The good news is that we have 100% FREE resources to get you there!
Ready to outsmart the dealerships? Enroll in Deal School now—CarEdge’s online, completely free car-buying course. Gain the insider knowledge to take charge of your purchase. Start mastering your deal today!
