Tesla continues to dominate the used electric vehicle (EV) market, holding a substantial 42% market share according to Cars.com.

Recent data shows that the price of the Tesla Model 3 has decreased by 29% year-over-year, while Model Y prices have dropped by 27%, contributing to a shift in the used EV landscape.

Prices for used Model Y vehicles are now falling below $25,000, making them eligible for a $4,000 federal tax credit, which further incentivizes buyers.

As of mid-August 2024, used Model 3 prices in Los Angeles start around $25,000, with lower prices available on various used car marketplaces, reflecting the increasing inventory.

In July 2024, the average price of a used Tesla Model 3 was approximately $26,000, nearing the threshold for a used EV tax credit.

The decline in prices for used Tesla Model 3 and Model Y vehicles is contributing to an increase in used EV inventory, which is impacting the overall market.

This increase in used vehicle inventory is exerting downward pressure on used EV prices, influenced by dealer discounts and the tax incentives from the Inflation Reduction Act (IRA).

The IRA provides a $7,500 credit for new EV purchases, indirectly lowering the price of used EVs in the market and making them more appealing to consumers.

New car demand has decreased by 26% year-over-year, while new car supply has increased by 45.1%, further contributing to the decline in used EV prices.

Overall dealer sentiment towards EV sales has significantly declined since its peak in the first quarter of 2022, reflecting the challenges in the current market.

Used EVs are now competing with popular gas-powered vehicles, which continue to enjoy high demand, complicating the market dynamics for electric vehicles.