The electric vehicle market is currently undergoing a recalibration. While some consider this a crisis for the industry, if you’re in the market for an EV it might be the best thing that could have happened.
The landscape for EVs today looks nothing like it did two years ago. We’ve moved past the early adopter phase where EV options were limited and prices were high. The market has matured with more variety and lower cost options, even with the elimination of the government rebates. There are now over 50 EV and plug-in hybrid (PHEV) models spanning every category, from the budget KIA Niro, Chevy Bolt, Volvo EX-30, and Toyota’s C-HR around $35K to the luxury SUVs from BMW, Audi, Cadillac, and Rivian. Along with lower-priced new cars are some of the used high-priced EVs from a few years ago that have taken a big hit in depreciation.
When I leased my Lexus RZ in 2023, discounts were roughly $15,000–$20,000 off the $60K sticker price due to its limited 230-mile range-which didn’t matter to me. Other luxury SUVs were in the $65K-$100K range, making the Lexus a great buy. That allowed me to reduce the capital cost so that monthly payments were commensurate with a $40,000 car. However, three years later, because EVs have depreciated much faster than ICE cars, the buyout price at the end of the lease will be substantially higher than the car’s market value. I’ll be reluctantly returning the car—adding yet another vehicle to the growing oversupply of used EVs.
The table below shows why EVs are such a good bargain: they’ve depreciated substantially greater than an ICE.
| Vehicle Type | Average 3-Year Value Loss | Typical Resale Value (% of MSRP) |
| Standard Hybrid (HEV) | ~30% | 70% |
| Gas (ICE) | ~35% | 65% |
| Plug-in Hybrid (PHEV) | ~42% | 58% |
| Electric (EV) | ~52% | 48% |
The oversupply has been exacerbated by the massive surplus of used Teslas and the price erosion of their used cars. For years, Teslas held their value better than almost any car on the road. Today, the market is flooded with them. While high sales volume is a factor, there is also a measurable erosion of the brand. A significant number of owners are trading in their Teslas specifically due to a dislike of CEO Elon Musk’s polarizing public persona. Tesla has lost nearly 60% of its brand value in 3 years, suffered its first sales decline in over a decade, and alienated its core progressive customer base. Few CEOs can accomplish this feat!
After driving an EV for three years, I remain positive about the technology, but I do miss my Chevy Volt—the PHEV that GM discontinued in 2019. Since I rarely drive more than 50 miles a day, the Volt and the Lexus offer much the same gasoline-free experience. While the Lexus is much more comfortable and better appointed, it’s frustrating that no modern PHEV has emerged that surpasses the Volt’s 58-mile electric range. You would expect the market to have hit the 100-mile mark by now, but as the table below shows, the industry hasn’t even matched the 2019 Volt.
| Category | Model | Electric Range (Est.) |
| Luxury SUV | Mercedes-Benz GLC 350e | 54 miles |
| Luxury SUV | BMW X5 xDrive50e | 38–40 miles |
| Compact SUV | Toyota RAV4 Prime | 42–50 miles |
| Sedan | Toyota Prius Prime | 44 miles |
| Midsize SUV | Mitsubishi Outlander PHEV | 38 miles |
| Family SUV | Kia Sportage PHEV | 34 miles |
The environmental case for both categories of these cars remains a big plus and the reason why I’ve been leasing or buying EVs/PHEVs since 2012.
Lastly, here are a few great examples of the second-hand market where low-mileage vehicles are selling for 50% less than their original MSRP.
- The Hyundai Ioniq 5, which won nearly every Car of the Year award at launch, has seen early-model resale values dip toward $22,000 compared to the original $50,000.
- The Genesis GV60, a $60,0000 car I had looked at and liked a lot, is available 3 yrs later for $30,000.
- Used Tesla Model 3s are now frequently listed between $20,000 and $25,000.
This may be the first time I’ve even considered a used car because you can get so much for your money in an EV. EVs are simpler designs and the fear of batteries not lasting more than 100K are gone based on the cumulative experience of this first generation of EVs. The choice is greater than ever for EVs well below $50K in both used luxury EVs or the new models of smaller EVs.
