Why tax credits on used EVs will take time to gain traction

With used EVs, battery range and health could be determining factors in a consumer’s purchase decision — regardless of whether they have a credit.

“Many of the vehicles in the used market that are EVs, you’re going to be looking at 80 miles … maybe 100, but then factor in that the battery doesn’t hold 100 percent of the charge anymore,” said Edmunds’ Drury. “You could be looking at something with 60 miles.”

On average, 23 percent of owners of 2020 or newer battery-electric vehicles said their battery range has worsened since they made their vehicle purchase, according to a 2022 J.D. Power study. That percentage rises to 47 percent for vehicles that are seven model years old.

Battery warranty coverage varies by automaker and vehicle, but most coverage is usually around eight to 10 years, according to Stephanie Valdez Streaty, research and development director at Cox Automotive Mobility.

To provide more transparency in the used EV marketplace, her group has been developing a tool for consumers that can certify a vehicle’s battery health.

“If it’s a used EV, and if it’s past that warranty, really understanding the health is going to be critical,” Valdez Streaty said.

Battery replacement costs could be significant, several dealers said, consequently reducing the tax credit’s effectiveness.

A refurbished battery pack can cost as little as $2,000 for an early Nissan Leaf, for example, but can exceed $10,000 for a higher-capacity one in newer models, according to AutoTrader, a unit of Cox Automotive.

“I think we’re a ways off from having to worry about that, but that’s not to say consumers aren’t going to ask dealers about it — they most certainly will,” said Brian Maas, president of the California New Car Dealers Association.

“Knowing the warranties and the expected shelf life of these batteries is going to be mission critical for both dealers and consumers,” he added.

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