Used EVs Are About to Flood the Market: What Dealers Need to Know and How They Can Profit

The used electric vehicle (EV) market is about to experience a massive shift, and for many dealerships, this presents both a challenge and an opportunity. As the transition to electric vehicles accelerates, millions of used EVs are set to enter the market over the next few years. However, many dealerships are unprepared to take advantage of this rapidly expanding segment. Jimmy Douglas, founder of Plug and former head of used cars at Tesla, shared valuable insights on the CDG Podcast, explaining why used EVs are misunderstood, underpriced, and primed to disrupt the market in the coming years.

1. A Wave of Used EVs Is Coming

Over the next five years, an estimated 10 million electric vehicles will enter the used market, primarily through trade-ins and lease returns. Despite this, 59% of dealerships do not handle used EVs, and the top three sellers—CarMax, Carvana, and Tesla—account for just 22% of all used EV retail sales. Even if the majority of dealers still don’t sell used EVs, every EV trade-in still requires appraising, valuing, and clearing it off the books. This creates a growing opportunity for dealers who are ready to adapt.

The challenge for most dealerships is not only getting ready to sell used EVs but also managing the process of taking in trade-ins and returning vehicles. Dealers who are proactive and ready to handle used EVs—by properly appraising them and pricing them competitively—will see significant profits. The increasing number of EVs in the market, combined with a lack of preparedness from many dealerships, presents a huge opportunity for those who act now.

2. Slower Turn Times Can Kill EV Gross

Unlike traditional internal combustion engine (ICE) vehicles, EVs tend to depreciate faster, especially beyond 30-45 days of inventory holding. A 60-day hold on an EV can result in double-digit losses. This is one area where top EV dealers shine, with the most successful dealerships turning their inventory in an average of 24 days. By pricing used EVs to move quickly and buying with precision, they can minimize depreciation and boost profitability.

Moreover, dealerships that brand themselves as EV destinations—offering consumer education on tax credits, charging options, and the total cost of ownership—are seeing greater success. Providing value beyond the sale, such as detailed explanations of government incentives and the long-term savings of driving an EV, helps build trust with customers and increase sales velocity.

3. Not All Model 3s Are Created Equal

The Tesla Model 3 is one of the most popular used EVs on the market, but it’s crucial for dealerships to understand that not all Model 3s are equal. Over-the-air updates, software unlocks, battery health, and charging compatibility can vary between individual vehicles. These critical factors often don’t appear in traditional vehicle valuation tools, leaving dealerships with an incomplete understanding of a vehicle’s true value.

To solve this problem, Plug, led by Jimmy Douglas, uses advanced technology that pulls data directly from a vehicle’s onboard systems via OEM APIs to verify range, features, and eligibility. By offering EV-specific valuations based on real data, dealers can provide more accurate pricing and avoid costly mistakes. "We’re the only auction that puts real cash behind EV-specific valuations," said Douglas, emphasizing the importance of accurately valuing used EVs.

4. The Used EV Market Is Expanding Beyond Coastal Bubbles

Traditionally, EV demand has been concentrated in states like California, but the used EV market is now expanding beyond these coastal areas. Dealers buying used EVs are increasingly spread across the country, with 78% of them operating in states outside of California. Additionally, half of all used EV transactions are crossing state lines, suggesting that demand for used EVs is not being satisfied by local supply.

This is a clear indication that the market is expanding, and dealers who understand that EV demand is growing across the country—and not just in coastal hubs—can strategically source vehicles to meet regional needs. With more used EVs on the market, dealerships that are aware of regional demand and inventory gaps will be best positioned to profit.

5. The Fate of Used EV Tax Credits

One factor influencing the used EV market is the federal tax credit, which currently offers up to $25,000 for used EV purchases. However, the tax credit’s $25K cap is depressing wholesale values, creating negative equity for many buyers and dealers alike. If the tax credits are repealed or phased out, used EVs could regain value, easing trade-in friction and making them more appealing to both dealers and consumers.

Douglas believes that a rollback of current EV policies could be a net positive for the used EV market, especially if the tax credit disappears. Without this subsidy, used EVs could regain some of their value, reducing the depreciation problem and making them a more attractive option for dealerships and consumers alike.

The Road Ahead for Dealers

As more used EVs flood the market, dealerships must adapt to the changing landscape or risk falling behind. Dealers who are prepared to properly value, price, and market used EVs will not only stay competitive but will also thrive as the demand for electric vehicles continues to grow. Understanding the nuances of EVs, embracing technology to aid in valuations, and offering education on the total cost of ownership will set dealers apart in this rapidly expanding market.

For more updates on the evolving used EV market and insights into how dealers can profit, stay informed with our latest articles and subscribe to our newsletter at ChargedUpPro.com/subscribe.

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