Electric Car Prices are Plummeting: Depreciation Crisis Or Buyer’s Market?

Key Takeaways

  • Popular EVs lose over half their value on day one
  • Depreciation hurts sellers but benefits used EV buyers
  • Length of ownership matters in today’s market

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Last updated Apr 24, 2024

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.

ev price trends

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.

BMW I4 for sale

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.

BMW I4 instant cash offer

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!

Mercedes Benz EQS for sale

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 …

Mercedes Benz EQS instant cash offer

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…

ford-mustang-mach-e-cash-offer

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

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5 Comments

  1. RICHARD McKee

    In searching for a Honda Acura I am discovering that some dealers are NOT willing to negotiate off their internet list price.
    EXAMPLE..A local dealer would not budget even though the Acura had been on the market for over 400 days and had a cracked windshield and would not start due to battery issues

    Reply
  2. Bruce Plas

    I bought a 2024 Ford Ranger and didn’t buy an extended warranty. I was going to use Caredge, but Caredge doesn’t offer warranties on Rangers. Why isn’t that offered where can I go to get a warranty?

    Reply
    • Zach Shefska

      Bruce, so sorry for this issue. We do offer coverage, it must be a website bug. Can you please send me the VIN and we’ll get you squared away ASAP!

      Reply
  3. RJ

    Thanks Zach and Pops – Would you say the same if buying a new 2023 Chevy Bolt (in 2024)? Should we expect to see significant depreciation in a short period of time? Used Bolts seem to be holding their value so well that I think its more cost effective to buy new. -Rich
    PS: Really like your content! You’ve got some great car shopping tips!

    Reply

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