Used BEVs Boost Dealers’ Profits

Battery-electric vehicles are starting to show up in the used-car market in more substantial numbers, according to the recent EV Trends Report published by the Carvana online used-vehicle sales network.

“The significant, multiyear growth in new EV sales is a leading indicator of the potential of the used EV market,” says Ernie Garcia, Carvana founder and CEO.

“As new EVs make their way into the used fleet, prices normalize and tax credits become available, more used-car buyers will have the opportunity to access the EV category,” he says.

Inevitably, used BEVs are growing larger on the radar for franchised, new-car dealers, too. Without disclosing numbers, Roger Penske, chair and CEO of Penske Automotive Group, says that with price cuts on new BEVs, his group is actually making more money on used battery-electrics than new.

“We’re making more money on those than we are on the ones that we sell new. So, interesting. Our guys are being very selective as we trade those, or we buy them in the open market,” Penske says.

Penske Automotive, Bloomfield Hills, MI, includes operations in the United Kingdom. EVs accounted for 15.5% of U.K. new-vehicle registrations overall in the first quarter, Penske Automotive reports.

In the U.S. market, Phoenix-based Carvana reports BEVs accounted for 4.3% of Carvana’s total sales in first-quarter 2024. That’s more than double the share of just 1.8% a year earlier, according to the Carvana report.

On the new-vehicle side, BEVs accounted for 7.6% of total U.S. units sold in 2023, vs. 5.8% in 2022. 

In 2023 for the U.S. market overall, Carvana says. EVs are 7.6% of total new cars sold, but used EVs are less than 1% of total used. 

Used-BEV sales growth is increasing as prices fall, Carvana says. Analysts say average prices for used BEVs are falling because of price cuts on new BEVs, led by Tesla and imitated by other brands plus a big increase in BEV models being offered by legacy brands.

Carvana reports  the difference between its average sales price for used BEVs vs. the average sales price for used vehicles with internal-combustion engines was $7,000 in the first quarter of 2024, down from $13,000 a year earlier.

The average sale price Carvana reports for used BEVs on its network was about $31,000 in the first quarter of 2024, down from about $37,000 a year ago.