The Expert Podcast

Wow, the EV market is taking quite a hit, especially the used market. We’re going to talk about some back stories there too, but the main point is that used EVs are facing a 33% price drop and longer selling times. This is amazing—used electric vehicles are almost like poison; they can’t sell them, and they’re backing up on dealers’ lots. Although electric vehicle sales are growing year over year, monthly and quarterly trends in used electric vehicles are troubling. Look at the year-over-year price comparison: all used cars are down 5%.

That’s normal depreciation. Electric vehicles, however, are down 33%—a third. This is huge. Behind the scenes, what are dealers saying? Here’s commentary from an auto finance journal: “How do you build the path to EV gross?” (where "gross" stands for gross profit, which is their margin) and still boost consumer availability? Dealers are saying that on the used car side, many of them lament they can’t move even used EVs in the $30,000 to $35,000 range, while these units devalue by the day. There is a growing problem that a lot of popular media and forecasters ignore in the rosy projections of EV growth.

Here’s the thing: vehicles in general are priced high—we know there’s inflation. But electric vehicles are facing more of a problem because the person who bought it brand new was probably an early adopter, wanting to be ahead of the market. People who buy used cars usually just want a car; they aren’t trying to set an agenda or make a statement—they just want a vehicle. So, what are dealers doing about it?

What they’re trying to do is take used EVs and put them into a lease status—what they call “selling it twice.” They sell it once to their own in-house company, and then once to you, so they double dip on the rebate. Maybe that helps you, but it’s still not getting the cars off the lot fast enough. What happens when cars sit on the lot? They sit on floor plan.

So, what is floor plan? Dealers have a line of credit, and all the cars on their lot are on this line of credit. They pay monthly payments just like you do on a car, and these monthly payments eat away at their profit margin. It’s troubling when these cars back up. We’d love to hear your thoughts—let us know in the comments what you think about these EVs and this used car market.