According to the Carfax Used Car Price Index, prices on used electric vehicles (EVs) and hybrids declined 22.1% year-over-year this past summer – in many cases, falling below $30,000. There is a lot to consider before buying a used EV, so we recommend doing some homework before breaking out your checkbook.
Consider Used EV Tax Credits. The Inflation Reduction Act introduced a new federal used electric vehicle tax credit, but not all EVs qualify. The used EV tax credit is worth 30% of its sale price, up to $4,000, on cars purchased after December 31, 2022. EVs that cost less than $13,333 won’t qualify for the full $4,000 tax credit.
For a vehicle to be eligible:
- You must buy it from a licensed dealer
- It must be priced at or below $25,000
- It must be purchased for primary use in the United States
- It must be a model older than two years before the purchase
In addition to the vehicle requirements, the buyer must qualify for the used EV tax credit based on their intended use and income:
- The EV must be purchased for use, not resale
- To prevent fraudulent purchases, the buyer cannot be the original owner
- The buyer cannot be claimed as a dependent on someone else’s tax return
- The buyer cannot have claimed another used clean vehicle credit in the previous three years
- The buyer’s modified adjusted gross income for either the current year or prior year must be $150,000or less for joint filers and surviving spouses, $112,500 or less for head of household filers, or $75,000 or less for other filers
Research State EV Rebates & Tax Incentives. In addition to the federal EV tax credits, some states and cities now offer new or used EV incentives, although they vary widely by jurisdiction. You may be required to buy from an approved dealer or meet income qualifications to get additional tax credits.
Visit the Database of State Incentives for Renewable Energy (DSIRE) for state-specific clean energy incentives. Dealerships may be helpful, but some may not be knowledgeable about state EV rebates and tax deductions.
The following tips will help you find a used EV that meets your needs:
Decide How Much EV Range You Need. Range needs vary depending on weekly milage and access to chargers. When shopping for a used EV, determine its EPA-rated range. Battery range usually declines by between 2% and 3% annually.
If possible, check battery health. Many EVs include diagnostic software that provides information on battery condition. Check the dashboard for the estimated range when the battery is fully charged compared to the original manufacturer. There are also devices that plug into the OBT port that assess battery health and you can sometimes ask the dealer to provide you with a detailed report, if available.
Some EV manufacturers have recalled batteries, which can be a benefit to used buyers. A recall means the battery is newer than its model year.
Understand EV Battery Warranties. Most EV manufacturers offer a battery warranty of 8 to 10 years or 100,000 miles, whichever comes first. Batteries are expensive so an in-tact warranty can be important. Just remember: A warranty may not be transferable to a new owner. Read the fine print.
Consider Buying or Leasing a New EV. Depending on the model, there might not be a large price difference between new and used. Like used EV prices, new EV prices have dropped recently. Several new EVs are available for under $40,000.
Many new EVs are eligible for a $7,500 tax credit in addition to state incentives, but some automakers with models that don’t qualify for the new EV tax credit can take advantage of a loophole by offering a $7,500 discount for leasing an EV.
Source: Earth911
