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We’ve written a few times about the US EV tax credit likely being cut in 2025 by Donald Trump and Republicans, and the point that you should probably buy an electric car ASAP (by the end of 2024) if you want to benefit from the $7,500 EV tax credit. Even if they wanted to, no automaker is going to be able to cut their prices by $7,500 to make up for the lost tax credit. However, it’s not just new electric cars that buyers should sprint to buy. The same goes for used electric cars, maybe even more so!
There are two reasons why today is the day to buy an electric car.
For one, there’s the simple matter that you can also get a tax credit for buying a used electric car. As the IRS writes, “if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit. The credit equals 30% of the sale price up to a maximum credit of $4,000.” That will most likely be gone in 2025 as well.
Secondly, there’s the fact that the EV tax credit for new vehicles also influences used EV prices. If you can get a $7,500 tax credit on a $40,000 electric car, in theory, that means that your new EV is worth just $32,500 … immediately. Why would anyone pay more than $32,500 for that car if they could get a brand new one, effectively, for that same price? In reality, the tax credit may not reduce the value of a car by $7,500. However, to some degree, the tax credit makes the resale value of an electric car significantly lower, which means the price for a buyer is significantly lower. Take that tax credit away and … boom, used electric cars cost more.
So, if you’ve been thinking about getting into the electric fun, now is the time to go buying one!
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