It’s hard to say exactly what’s killing the U.S. electric vehicle market. Instead, it caused a retreat from every major car company in the world that was trying to get a piece of what they thought would be a hugely successful car company. Electric cars have become unattractive, with used Teslas selling for less than $20,000, according to used car website Carvana. This is the case with Model 3. A new 2026 Model 3 will cost around $45,000, depending on features.
The loss of manufacturers is bloody. The Financial Times recently reported on this story in an article titled “Global carmakers collectively withdraw from electric vehicle plans.” Each of these large companies relies on several factors. For environmental reasons, people will no longer use gasoline-powered cars. According to the EPA, “Transportation will account for the largest portion (28%) of total U.S. greenhouse gas emissions in 2022.”
There is also an assumption, although difficult to prove, that natural gas prices will increase over time. The current war with Iran and its impact on natural gas prices suggests this may be true.
Government incentives are important. In the United States, the price of an electric car reaches $7,500. The Trump administration killed that. The Biden administration aims to have electric vehicles account for 50% of all new car sales by 2030.
Within days of the EV credit ending, Ford took a $19.5 billion write-off on its failed EV business. General Motors, Honda, Stellantis and Volkswagen also took $1 billion in writedowns. Subsequently, Tesla, the U.S. electric vehicle leader, stated that its global sales in 2025 will decline compared with 2024.
As demand for electric vehicles falls, so do used EV prices. The problem has worsened as leases expire on electric cars delivered to buyers on three-year leases, dumping more inventory during a period of weak demand.
It’s unclear this year whether used electric vehicle prices will rebound as gasoline prices rise. Many Americans still won’t buy an electric car. They don’t like long charging times, short range and fast tire wear.
If gas prices stay above $5 for an extended period, electric vehicle sales may rebound. Prices for used electric cars are likely to rise as a result. Meanwhile, used EV prices will fall, with a used Tesla likely to sell for $20,000