On Jan. 1, 2025, the percentage of potentially eligible used EVs will jump to 89 percent from 65 percent
Almost a quarter of electric vehicles in the U.S. may become eligible for a $4,000 tax credit in January, according to data from Recurrent — but they are not all created equal.
The EV model year must be at least 2 years older than the current calendar year, among other requirements, in order to be eligible for the federal tax credit of up to $4,000. That means on Jan. 1, 2025, 2023 model-year vehicles may qualify, and the percentage of potentially eligible used EVs will jump to 89 percent from 65 percent.
EV volume exploded in 2023, when Americans bought 1.2 million, roughly the same as 2021 and 2022 combined, according to Kelley Blue Book. The lease mix for EVs in July 2023 was 18.7 percent, up from 9.2 percent in July 2022.
It’s “like a high school and this huge freshman class enters,” said Scott Case, CEO of Recurrent. “That’s what’s going on on Jan. 1 because so many more cars” may gain eligibility.
While the tax credit makes late-model-year used EVs more appealing, much older EVs that often have battery and charging issues may be a challenging sell, especially when replacement batteries can cost as much as the vehicle itself, according to a report published Oct. 15 by Consumer Reports.
First-generation EVs have design flaws and technological quirks that render them a mixed bag in terms of value. Late-model used vehicles are typically more reliable, though different climates or histories can affect battery health. Model-year and use-casediscrepancies create a lot of work for consumers interested in purchasing used EVs ahead of the major incentive milestone.
“For certain buyers, a used EV is a really, really great deal,” said Keith Barry, a senior auto reporter at Consumer Reports.
But occasionally, older EVs have battery issues. “If something goes wrong with the battery on one of those first cars, it could be a lot of money,” he said.
The average used EV with 25,000 to 49,999 miles on the odometer costs $27,639, nearly 9 percent cheaper than the $30,261 for a used internal combustion engine model in that mileage range, according to Edmunds.
A battery replacement out of warranty can cost between $6,400 and $20,000, Recurrent said.
Dealers will also have to make the case to skeptical consumers that a battery in a 2023 Tesla Model S is not the same as a 2015 Nissan Leaf’s.
In general, the newer the battery, the better. Those 2023 model-year vehicles coming into tax incentive eligibility are likely in good shape. Today’s batteries should last up to 15 years in moderate climates and up to 12 years in extreme climates, according to the National Renewable Energy Laboratory.
Older batteries have different chemistries and cooling methods. Almost 1 in 5 2013 Model S owners had to replace their batteries after 10 years for $15,000 each, according to a Consumer Reports reliability survey from 2023.
Beyond the broad trend favoring newer batteries and batteries under warranty, consumers will have to do their due diligence via a battery health check. Consumer Reports advised that potential buyers should make sure software is up to date, check out open recalls, ask the dealership or seller for a photo of the dashboard illustrating the car’s range estimate after it has been charged overnight and look at other stats via the onboard diagnostics port.
Issues vary
That’s because vehicles may have varying issues with electric drive motors, charging and battery health depending on how they were used, climates they were driven in and how often drivers employed fast charging, which can degrade the life of a battery. Some vehicles may be able to charge faster than others: Most older EVs had maximum charging acceptance rates of 50 kilowatts, while newer vehicles can have maximum acceptance rates of 240 kW.
“We are still in this transition period, and that’s even more so for used vehicles because there are so many eras of electric cars being sold,” said Barry. “All these quantum leaps that we see every couple of years in the technology, in the charging, in the range — they’re all out there” and “it’s a mixed bag.”
