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, according to data released by Cox Automotive on April 7.
As EV sales in the U.S. mount, Cox forecasts sales of new EVs will surpass one 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. Although used EV sales have lagged the new-vehicle market, that is starting to change.
“Every new vehicle eventually becomes a used vehicle,” said Jonathan Smoke, chief economist of Cox Automotive, in a news release. “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 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, wholesale values of used EVs have increased by 3.7% year over year, compared to the overall index decline of 2.4%, according to the Manheim index.
Retail used electric vehicle sales – EVs sold through a licensed dealership – increased significantly in Q1, up 32% year over year, to 42,753 units, according to Cox Automotive data. (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.
The average retail listing price for a used EV last quarter was around $43,400, a decrease of about 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 prices 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 Q1 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 about 7% of new-vehicle sales.
Cox Automotive is Embracing the Industry Challenge of EV Valuation
As the used EV market gathers speed, Cox Automotive is expanding the art and science of calculating car values to drive confidence and transparency in the electric vehicle market to support the growing demand.
“There is no doubt that the shift to electric vehicles is having a profound impact on the larger automotive market,” said Joe George, president of Cox Automotive Mobility, in a news release. “As more EVs become used EVs, we are developing our ability to help the industry accurately value each vehicle and, importantly, provide the industry with the services required for the entire lifecycle of an EV, down to end-of-life battery management.”
In 2022, dealers visited the MMR website 6.7 million times to assess the wholesale value of a used EV, while consumers visited KBB.com 3.3 million times to assess the retail or trade-in value of an EV. Kelley Blue Book Instant Cash Offer recorded a rapid jump in EV traffic. Electric vehicle valuations were provided to more than 19,500 EV owners in Q1 2023, an increase of 144% from Q1 2022.
As more used EVs enter the market, Cox’s approach to EV battery health scoring and diagnostics will also play a role in setting the foundation for the industry standard in EV battery inspection and valuation. This includes continued research and development around Cox Automotive’s EV battery health mobile app at Manheim operating locations.
