- Used EVs are already cheaper than ever. In January, the deals get even better.
- Next year, 2023-model-year EVs become eligible for the federal used EV tax credit.
- The credit is worth $4,000 or 30% of a vehicle's purchase price, whichever is less.
Deals on used electric vehicles are plentiful right now. Lightly used Tesla Model S sedans are going for Model Y money. Subaru Solterras can be had for around $20,000. Low-mileage Lucid Airs are going for half off. All in all, there’s never been a better time to get plugged in on a budget.
But if you can wait until early next year, things are about to get much, much better. Many, many more EVs will become eligible for the federal used EV tax credit in January. According to research from battery health startup Recurrent, “this coming January, the largest ever influx of EVs to the used market gains eligibility.”
The firm, which tracks battery health in used EVs, says that 65% of EVs listed on the used market are already old enough to qualify for the credit. Thanks to booming electric sales in 2023, another 24% will meet that requirement come January 1. Say hello to a 2023 Chevy Bolt for just over $10,000.
Let me back up here. The $4,000 used EV tax credit passed as part of the 2022 Inflation Reduction Act applies to vehicles with a model year that’s at least two years older than the calendar year in which the car is sold. When the program kicked off on January 1, 2023, vehicles up to and including the 2021 model year qualified. This year, the selection expanded to 2022 cars. And this coming January, 2023-model-year EVs and plug-in hybrids gain eligibility.
This is huge. Sales of new EVs have risen dramatically over the years and will continue to do so. So every January 1, the breadth of credit-eligible EVs is poised to grow significantly.
In 2023, U.S. EV sales crossed the 1-million-unit mark for the first time, hitting 1.2 million. That’s up from 800,000 in 2022 and under 500,000 in 2021.
Now, not every 2023 EV will instantly qualify. Used cars also need to be priced under $25,000. Buyers need to meet income caps of $75,000 for an individual, $150,000 for a married couple or $112,500 for a head of household. And the car must be sold by a dealer, not a private party.
Meeting all those requirements gets you a credit worth $4,000 or 30% of the vehicle’s price, whichever is less. Importantly, both the new and used EV tax credits are now available as an upfront discount, rather than a tax-time refund.
Still, plenty of 2023 EVs on the market right now fall far under that $25,000 cap, suggesting that some fantastic deals may be available in early 2025. I see tons of low-mileage Chevrolet Bolt EV hatchbacks and Bolt EUV crossovers listed online for roughly $15,000-$17,000. Do the math and you end up with a take-home cost of just $11,000-$13,000 for an EV with decent range that may have first hit the road less than two years prior. There are Nissan Leaf hatchbacks in that ballpark too.
Up your budget to the $20,000-$25,000 range, and larger crossovers like the 2023 Subaru Solterra, Toyota bZ4X and Kia Niro EV enter the mix.
Just remember that these prices may change once the credit can be applied, said Liz Najman, Recurrent’s director of market insights. Some asking prices may rise to account for the new discount, she said. But the opposite is also true, which is good for buyers. 2023 cars currently priced just above the $25,000 cap could get a bit cheaper, Najman said.
Contact the author: tim.levin@insideevs.com
