When considering vehicle acquisition, particularly in the pre-owned market, electric vehicles (EVs) present a compelling financial case over their gasoline and hybrid counterparts. While the new EV market in the United States currently lacks options under $25,000, prompting a search for more affordable alternatives, a recent study from the University of Michigan illuminates the profound long-term economic benefits of opting for a used EV. This research underscores that used EVs not only experience significant initial depreciation, making them more accessible, but also offer a superior total cost of ownership throughout their lifespan compared to equivalently aged internal combustion engine (ICE) or hybrid vehicles.
The comprehensive study, which meticulously analyzed 260,000 used vehicle listings from January to December 2024 across 17 major U.S. cities, concluded that a three-year-old electric midsize SUV can yield an impressive $13,000 in savings over a seven-year ownership period. In stark contrast, a comparable gasoline SUV would only save approximately $3,000, and hybrids/PHEVs a mere $1,000. These substantial savings stem from several key factors: the rapid depreciation of EVs in their initial years (some models losing over 60% of their value in five years), significantly lower maintenance and repair costs (a three-year-old electric midsize SUV can save $4,600 in these areas compared to an ICE equivalent), and the surprisingly slow rate of battery degradation. Telematics firm Geotab's 2025 study revealed an average battery degradation of only 1.8% per year, meaning a modern EV could retain about 64% of its original battery capacity even after two decades, well beyond the typical ownership period assumed in the Michigan study. However, it's crucial to acknowledge that an unexpected battery replacement shortly after warranty expiration could drastically alter the financial landscape, transforming an EV from the most economical to the most expensive option.
Ultimately, the decision to purchase a used EV is highly individualized, contingent on various factors such as driving habits, local electricity rates, the specific EV model, and the remaining warranty period. Despite these variables, the overarching trend indicates that a pre-owned EV can be a far more economical choice than a gasoline vehicle for cost-conscious buyers. By choosing a used EV, consumers can bypass many common maintenance issues associated with older gasoline cars, such as timing belt replacements and transmission fluid flushes, thereby embracing a more sustainable and financially prudent mode of transportation. With the average price of a new EV approaching $60,000, the used market offers an excellent opportunity for astute buyers to realize significant savings and contribute positively to environmental sustainability.