Understanding the Used Vehicle Market and Its Implications for Electric Vehicles

Abstract

Understanding the adoption of electric vehicles (EVs) in the used vehicle market is crucial for achieving mass market penetration. This area, however, remains relatively under-studied. This research aims to understand the new-versus-used vehicle choice behavior and the consequent vehicle ownership cost by analyzing consumer expenditure survey data that tracks households’ expenditure on vehicle acquisition and operation on a national scale (U.S.). The motivation is to understand how much households who generally purchase used vehicles can gain or lose if they transition to a used EV instead. The choice model and cluster analysis conducted show that ownership of used vehicles is associated with family size, income, housing tenure, and age. Additionally, for lower-income renters, vehicle ownership and purchase costs tend to consume a high fraction of their household income, raising equity concerns and indicating that these households need particular consideration while encouraging the EV transition. Moreover, while the current average price paid for a used conventional vehicle is approximately $14,077, the price for a used EV of a comparable vintage can range between $9,177 to $37,078 depending on the electric range and whether it is a luxury or an economy segment vehicle. This price disparity suggests the need for incentives to encourage the used EV market. The current study can serve as a starting point and can be of interest to stakeholders, such as policymakers, who can be informed about what is necessary for potential buyers of used EVs to transition to EVs.