If you’re in the market for a used EV, you’re looking at the right time. Prices for used EVs dropped dramatically, with the Tesla Model 3 leading the pack down 30%. Now compare this to used car prices in general, which have dropped only 4% in the first half of 2023. So used car prices are stabilizing, but used EV prices are beginning to tank. 

And they’re not only falling, but prices are falling at an accelerating pace. Should you hold out a couple more months? That’s hard to predict. But used EVs fell almost 17% in March, 24% in April, and almost 29% in May. Now for the first half of the year, prices are just under 30%, according to iSeeCars. 

What’s causing used EV prices to plunge?

Because Tesla keeps dropping prices on its new models, it negatively affects used EV prices. Because of the volume of EVs Tesla sells, it dramatically affects the entire EV segment. So let’s look at Tesla Model 3, Model S, and Model X prices.

Average used prices for the Tesla Model X SUV are at $70,000, for an almost 19% drop year over year. For the Model S, average used prices are $65,000, for a $15,000 decline. And the extremely popular Model 3 dropped 30.5% or $16,350 since June 2022. 

What about new EV prices?

So the average price for a used Model 3 is $37,000. But guess what? A brand new 2023 Model 3 has a base price of $40,000. As much as the Model 3 has dropped, it still holds its value well. So the question becomes do you buy one used or spend a few more grand and get an all-new 2023 version?

Another issue that could be holding down used EV prices is financing. Used car financing rates are always higher for a couple of reasons. A lending institution has a harder time determining used car values down the road than those of a new car. The other reason is that used cars are closer to facing repairs than new ones. 

Should you go new or used?

So faced with a lower interest rate on a new Model 3 and a higher interest rate on a used one, that $3,000 differential gets smaller. Overall, it’s a great time to choose an EV, whether new or used. For non-Tesla EVs, new and used supplies are bloated, while for Teslas, price cutting drives down everything electric. 

Electrek notes that two forces are affecting used Tesla prices right now. EV supplies are lower because people are keeping them longer and not upgrading to a new model. But used prices are weak because they’re still so close to new Tesla pricing, and financing is higher. As we keep saying, 2023 is a crazy year for car sales. New, used, EV, gasoline, it is a wacky time for the auto industry.