In the ever-evolving electric vehicle (EV) sector, the second-hand market witnessed a noteworthy development in the second fiscal quarter of 2024 – a persistent decline in prices. This persistent price decline, observed since the previous year, is largely attributed to the substantial and aggressive price cuts initiated by American EV giant Tesla Motors, which have exerted a noteworthy influence on the value of used electric cars across the United States.

A report published by Recurrent for second fiscal quarter of this year revealed that 55 per cent of all EVs listed for sale in the United States were priced below $30,000. Furthermore, more than half of all used EVs were available for less than $25,000, rendering them eligible for the federal government’s tax credit of $4,000. The tax credit figure is three times higher than what was offered when the Inflation Reduction Act (IRA) was enacted, indicating a clear downward trajectory for used electric car prices.

Further analysis indicates considerable depreciation rates for various Tesla models. Over a year, the price of a two-year-old Model 3 electric sedan fell by 27 per cent, while the depreciation for a similar Model Y and Model S stood at 31 per cent and 32 per cent, respectively, compared to the corresponding quarter of 2023.

Separately, a different study conducted by iSeeCars revealed a stark contrast in depreciation rates between EVs and internal combustion engines (ICEs) or hybrid vehicles. From February 2023 through February 2024, electric cars depreciated ten times faster, with the average price of used EVs falling by 31.8 per cent compared to a 3.6 per cent decline for used cars overall.

Despite EV giant Tesla's prominent role, the Chevrolet Bolt EV experienced the most noteworthy year-over-year price decline among used EVs, losing an average of 30.4 per cent. It was followed by the Nissan Leaf and Kia Niro EV. Tesla EVs, including the Model X, Model 3, and Model S, also witnessed substantial depreciation rates.

While the average price of 1-5 years old EVs fell from $43,694 in March last year to $30,904 by February this year, Tesla EVs bore the brunt of this depreciation, experiencing a loss of up to 28.9 per cent.

With manufacturers maintaining discounts on new electric models, the downward pressure on prices of used EVs is expected to persist. Beyond Tesla, brands like Lucid and Fisker have also introduced substantial price reductions, reflecting the competitive dynamics and evolving landscape of the EV market.