David Cottrell got a $39,999 Tesla Model Y this past February. He says the compact electric hatchback was a great car. But only a few months later, he decided to enter the make and model on the website of an online used car retailer. Surprise! Tesla was already worth more than $10,000 than he and his wife paid for it. They were considering buying a home in their hometown of Seattle, and the extra money felt like a no-brainer. By June, they had sold for $51,000—a nice profit.
Now, Cottrell views the deal with some regret. He loves his new home and is excited about booking his spacious Rivian electric truck, which is due for delivery this summer. But when he connected the same Model Y to his used online retailer again this month, he found the car was worth only about $2,000 less than what he sold—even after factoring in the 20,000 miles it’s driven since. “If we could have kept it, I could have driven here for a year, and I would have been pretty much equal,” he says.
This is not how a vehicle’s life span is supposed to work. It is supposed to lose its value over time. This is why used cars, in general, are less expensive than new cars. But for now, everything is upside down. A toxic combination of pandemic-era supply shortages and inflation drove up prices for used cars and trucks, which were up 35 percent in March from the same period last year, according to the U.S. Bureau of Labor Statistics. Luke Walch, owner of Green Eyed Motors, a dealership out of Boulder, Colorado, that specializes in electric and hybrid cars, says it’s not unusual for some luxury used cars, such as Porsche and Corvette, to go for more than original sticker prices. Now, “it’s been moved to a common people’s car,” he says.
Things are getting even weirder in the land of electric cars, as used cars seem to be getting newer. Figures tracked by Recurrent, a company that tracks electric vehicle battery status, and data firm Marketcheck show that last year, the majority of used electric vehicles for sale were four or five years old. Today, just under a third of used electric vehicles are three years old. Electric vehicles sold in 2020 or 2021 make up 17.5 percent of inventory. “He. She he is Strange,” says Brian Moody, executive editor of Autotrader, an online car marketplace. In fact, the whole situation is almost unprecedented, he says.
If you’re someone who’s hoping to go electric now, that’s a pity too. Despite the higher prices, electric and hybrid vehicles are moving much faster than they can get, Walsh says. Carvana, a company that buys and sells used cars online, says 90 percent of its electric vehicles are in the process of being purchased, compared to 45 percent just over a month ago.
The rise of the new used car began with the lack of microchips, which began to seriously affect car production in 2021. Today’s cars use at least 100 chips to control their complex electronic systems, and especially complex electric vehicles can use up to 1,000. But when The COVID-19 pandemic first appeared in 2020, automakers slashed their sales forecasts and purchases of chips. The chipmakers sold their wares elsewhere. Then came the federal stimulus checks, which sent thousands of dollars into American bank accounts. Some Americans sought out large purchases filled with chips, such as computers, game consoles, and cars. But automakers no longer had silicon to make cars and had to slow or even stop production. The chaos drove up prices for new cars and sent more cost-sensitive buyers into the used market, where prices skyrocketed, too.
The Russian invasion of Ukraine — and subsequent sanctions on Russian exports — created new bottlenecks in the supply chain. The price of nickel, a component of some electric car battery chemicals, has fluctuated significantly last month. In the United States, skyrocketing gasoline prices have prompted car buyers to seek electric vehicles. “prices [electric vehicles] “It was creeping for a while, then there was a big jump with the war and high gas prices,” says Bustenmer, owner of Green Light Auto Wholesale, which sells used electric and hybrid cars in Daly City, California. “It’s just crazy. It’s at an all-time high.”
The new and used EV crisis — and the temptation for electric vehicle owners to flip their new Teslas, Ford Mustang Mach-Es, and even low-end cars like Nissan Leafs — could continue for a while. New cars are getting a bit cheaper, with transaction prices for new cars down 0.3 percent between February and March, according to Kelley Blue Book, an auto research company. But new car transaction prices are flat — even rising — for electric cars (which saw a 1.8 percent jump in the same time period) and hybrid cars (8.6 percent). In other words: new green cars aren’t getting any cheaper now.
And here’s the big problem with electric: Some of the new cars that were supposed to hit the market in 2020 and 2021 were never built. That means fewer used cars are on the market this year, next year, and next year. “At some point, new car prices will recover, but it will take a long time,” says Scott Case, co-founder and CEO of Recurrent, a battery health company. “This whole system — it’s going to take a long time to get up and running and get to the new normal.”
This story originally appeared on wired.com.