While knowing the top EVs with the best trade-in values is helpful, many facets of today's car business can change these details.
The car market in the U.S. has yet to return to pre-pandemic conditions. In the U.S., consumers bought almost 14 million new vehicles in 2022, a 7.8% decrease from 2021. That compares to sales figures from the previous decade when moving 16 million to 17 million new cars was considered a successful year.
In other words, new car supplies remain tight, which makes used cars (and trade-ins) more valuable. That's good news for those with a trade-in but not for used car shoppers.
According to CarGurus, the average retail price for a used car in mid-January 2023 was $28,785, a significant decline from the record $31,775 in July 2022. But, the typical used car buyer in early March 2020 (before COVID-19 hit the U.S.) only shelled out $21,113.
There's plenty of room for used car prices (and trade-in values) to fall, but no one can say if this will continue to happen and by how much.
The Tesla Effect
Mentioning electric vehicles without a reference to Tesla is hard to do. The EV giant gets credit for accelerating the electric vehicle revolution by introducing the stylish Model S sedan in 2012 (Tesla also previously produced a few thousand electric roadsters). Over the years, the company introduced the more affordable Model 3 sedan and Model Y SUV and raised prices in response to significant demand. Moves that helped keep Tesla trade-in values strong.
But times change; Tesla's dominance is declining. The company once held almost 80% of the EV market in 2020. That slid to about 65% two years later as major automakers, like Ford, General Motors, and Volkswagen, offer competitive EVs.
In early January 2023, Tesla announced significant price cuts, up to 20%, in response to slower sales and a sinking stock valuation. This repricing also makes some Tesla models eligible for new federal EV tax credits (see below). It remains to be seen how the revised selling prices for new Teslas will change trade-in values, but it's a safe bet it won't be in an upward direction. At the same time, used Teslas with worse depreciation could impact the valuations of other EV trade-ins.
Adding another wrinkle to EV trade-in values is the rollout of revamped federal electric vehicle tax credits under the recently-passed Inflation Reduction Act. Qualifying new EVs (which involves a complex formula of manufacturing location and material sourcing) are eligible for up to a $7,500 federal tax rebate which can be applied towards the purchase price at the dealer (the old way involved filing a tax return and waiting for the credit).
For the first time, used EVs are eligible for a 30% tax rebate of up to $4,000 (on second-hand electrics at least two years old and selling for under $25,000). It all adds up to a great deal of uncertainty about how these subsidies will affect EV valuations.
This story originally appeared on CoPilot and has been independently reviewed to meet journalistic standards.