Used-EV sales are projected to reach a record in the second quarter following increased demand for affordable vehicles.
Sales of used EVs are projected to surpass 100,000 units in the second quarter, setting a record, Stephanie Valdez Streaty, director of industry insights at Cox Automotive, told Auto Finance News.
The uptick in sales is in part due to a pull forward in consumer demand ahead of the possible elimination of the federal EV tax credit, which allows consumers to claim a credit of up to $7,500 against federal taxes when they lease or purchase an EV.
As a result, “we’re seeing a big boost in the used-EV market,” Peter Glenn, co-founder and co-chief executive at fintech EV Life, told AFN. EV Life’s originations have risen by more than 200% month over month in June, Glenn noted, without providing specifics.
In May, used-EV sales rose 32.1% year over year and 1.1% month over month to 36,609 units, according to Cox. In April, used-EV sales also rose 60.6% YoY and 14.4% MoM to 38,763 vehicles.
“Sales will continue to grow in places where local governments provide programs to incentivize [EV purchases],” Glenn said.
EV adoption has grown in some regions, such as California, while trailing off in others because of state-level incentives, he said. For example, New Jersey introduced a $250 annual fee on zero emission vehicles on top of the registration fee and cut EV rebates in half.
Mixed outlook on sales
Some financiers foresee used-EV sales increasing in the coming months, while others expect challenges.
“Q2 is going to be the biggest quarter for used-EV sales … that’s guaranteed,” Andreas Wallendahl, CEO of EV-financing company Tenet, told AFN, noting that the sales trend is driven by the higher number of EVs coming off lease.
“It’s a natural dynamic of having seen rapid new EV growth over the past three years,” he said. “I expect Q3 to exceed Q2 as well.”
Despite the uptick in EV sales, some financiers expect the increase to be short-lived.
The summer is going to pose a challenge for vehicle sales as many consumers already purchased sooner than they planned, and EV sales may be especially challenged, John Possumato, founder and CEO of mobility company DriveItAway, told AFN.
Fear of tariffs and possible elimination of tax credits “didn’t increase sales. It pulled them forward,” he said.
Meanwhile, new-EV sales are falling behind used numbers. New-EV sales decreased 10.7% YoY and were up 4.2% MoM in May to 103,435 units, according to Cox.
“It’s dicey and going to get dicier” if the incentives go away, Possumato said, noting that “all the die-hard EV folks have already been sold to.”
Register here for “Digital strategies for exceptional customer experience,” a free Auto Finance News webinar set for Tuesday, July 15, at 11 a.m. ET.