The price crash of electric vehicles (EVs) is becoming increasingly severe, with the history of "premium" brand ideas being affected.

• On average, gas-powered vehicles are now selling for thousands of dollars more than used electric vehicles.
• An analysis from iSeeCars reveals that the difference in price between a used Tesla Model 3 and BMW 3 Series indicates that the initial "premium" associated with EVs has been eliminated.
• With the increasing availability of used electric vehicles at lower prices, there is a growing pool of potential first-time EV owners.

In February, electric vehicles became cheaper than gasoline-powered vehicles for the first time, and the gap between their prices keeps widening as buyers increasingly reject the "premium" label associated with EVs.

Over the past year, the decline in gasoline-powered used vehicle prices has been between 3-7%, while electric vehicle prices have decreased 30-39%. In May 2023, the gap between the average price of used EVs and gasoline-powered cars in the U.S. widened from $265 in February to $2,657, according to an analysis of 2.2 million one to five year-old used cars conducted by iSeeCars.

According to iSeeCars executive analyst Karl Brauer, used car shoppers are no longer willing to pay a premium for electric vehicles. In a report published last week, Brauer stated that electric power is now viewed as a detractor in the consumer's mind, making EVs less desirable and therefore less valuable than traditional cars.

The price difference between used luxury brands and EVs has increased, with Tesla Model 3 being priced $4,800 less than a BMW 3 Series in May 2023, despite costing $2,635 more in May 2023.

The market for used electric vehicles (EVs) is growing rapidly, with more people selling their used EVs than ever before. In 2022, 176,918 used EVs were purchased in the U.S., and in May alone, that number increased to over 45,000. The used vehicle market is much larger than the new car market, and the value of used vehicles rapidly depreciates. A one-year-old used car is, on average, priced at 80% of the same car sold new. As more EVs enter the used market at lower prices, the EV market becomes accessible to a wider market of potential first-time EV owners.

Despite the recent shift in consumer perception towards EVs, the premiums for used EVs are likely to decline due to several factors. Firstly, battery technology is improving rapidly, resulting in longer ranges and better battery life with temperature control for charging. Secondly, consumers are concerned about the degradation of batteries over time. While newer models have a higher value embedded in their batteries, used EVs can still retain a significant portion of their value. Additionally, EVs have lower overall owner costs, including fuel and maintenance, and owners of used EVs can qualify for federal tax credits.

The recent decline in used EV prices has been attributed to Tesla CEO Elon Musk, who initiated a price war in the industry by cutting prices on Model X, Y, and S vehicles in 2023 and 2024. Scott Case, CEO of Recurrent, a startup that measures EV battery performance for auto consumers, stated that declining used Tesla prices correspond to new Tesla price drops, followed by decreasing prices across used EV competitors.

In January, Hertz Car Sales locations sold off approximately one-third of its EV fleet, which consisted of used Teslas, at an average price of $25,000.

Due to declining market demand for EVs and a lack of infrastructure, many auto companies have shifted their focus to hybrid models, which are currently experiencing growth. General Motors recently adjusted its expected sales and production of EVs from a 200,000–300,000 range to 200,000-250,000, with EVs accounting for less than 3% of GM's Q1 sales. Ford has faced losses from its Model E electric vehicle rollout, despite combined hybrid and EV sales rising in May. In response, Ford has decided to rescind a program announced during the initial EV boom that required dealers to invest in EV infrastructure to sell electric vehicles.

Although charging infrastructure is still in its early stages, the number of publicly accessible electric vehicle charging stations in the U.S. has grown to over 64,000, with over 176,000 total EV charging ports. This growth, which was driven by the Inflation Reduction Act of 2022, which included tax incentives to adopt EVs, has made it easier for many Americans to switch to electric vehicles. However, there are still roughly 145,000 gas stations in the U.S., which may continue to be a barrier for some individuals.

According to a Pew Research analysis utilizing Department of Energy data, approximately six out of ten Americans reside near a public charger. However, only 7% of individuals living near a charger are likely to purchase an electric vehicle (EV), Pew discovered. The majority of EV charging takes place at home, while there are also regions with a scarcity of charging stations, known as "EV deserts."

In April, a Gallup poll revealed that ownership of EVs in the US increased by 3% annually, but there was also a 3% decline in consumers who expressed serious interest in purchasing an EV, dropping from 12% to 9%. As a result, 35% of Americans said they might be interested in buying an EV in the future, which is a decrease from 43% reported last year.