Buying an Electric Vehicle in 2024? Here's Why Used EVs Can Save You Money

If you want to buy an electric vehicle (EV) in 2024, it's important to stay on top of the latest changes in the EV landscape. The rules for EV tax credits have changed for 2024 in a way that might make buying new EVs less appealing.

New electric vehicles continue to be significantly more expensive than gas-powered cars, and many people might suffer from range anxiety (concern over running out of battery), higher costs of auto insurance, or lack of reliable EV charging stations. Electric vehicle charging infrastructure is still being built, and many states offer tax credits and rebates for home charging stations. But some people might worry about arriving too early for the EV party.

With all of these factors in flux, the idea of buying a new EV might feel a little too risky, confusing, and expensive. If you want to buy an EV in 2024, buying a used EV could be a smarter move for your personal finances. Let's look at a few reasons why.

$7,500 EV tax credits for new cars are harder to get in 2024

The federal government is offering significant tax credits of up to $7,500 for buying new EVs, but not all vehicles qualify. The tax credits are intended only for vehicles made from parts and materials that are mostly made in (or sourced by) U.S. companies. Some new electric vehicles in 2024 are no longer eligible for the $7,500 EV tax credit, or even for a reduced $3,750 credit.

According to Inside EVs, several models of electric vehicles, including the GM Chevy Blazer EV, the Ford Mustang Mach-E, and a few variants of Tesla Model 3, have lost their eligibility for EV tax credits. These changes might be temporary -- car makers can regain eligibility for the EV tax credits if they change their supply chains to get more U.S.-made parts and materials. But it's another sign of how uncertain the shopping environment for new EVs can be.

Why this makes used EVs a better buy: If you can't get a tax credit for buying a new EV, buying a used one might be more cost-effective.

Used EVs can get tax credits of up to $4,000

The news about EV tax credits isn't all bad for car shoppers: pre-owned EVs can also qualify for an EV tax credit of up to $4,000. And starting from January 2024, EV tax credits (for new and used cars) can be applied immediately to the purchase of your vehicle at the auto dealership.

This means that if the car you want to buy qualifies for a tax credit (your dealer will tell you), you can let the dealer give you an immediate rebate on your car sale, and the dealer gets reimbursed by the IRS. It's like getting an immediate cash discount on your EV, instead of having to wait to file next year's taxes.

If you want to get a $4,000 tax credit on your used EV, there are a few rules, including:

• You must buy the vehicle from a dealer.
• The sale price of the pre-owned EV must be $25,000 or less.
• The tax credit is 30% of the sale price, up to $4,000. So if you buy a $25,000 car, even though 30% of $25,000 is $7,500, you can only get $4,000 of EV tax credit.
• The EV's model year must be two years (or more) prior to the current year. (So you could get a car from model year 2022 or older -- but some model years are too old, because those older EVs and plug-in hybrids don't have the right battery capacity or sourcing requirements of the tax credit law.)
• Your modified adjusted gross income (AGI) must be $75,000 or less (for single filers) or $150,000 or less (married filing jointly).

The used EV tax credit can be applied to qualifying vehicles that are all-electric, plug-in hybrid, or fuel cell electric. To learn more about the rules for the used EV $4,000 tax credit, and see a full list of vehicles that qualify, check out the U.S. Department of Energy's fuel economy site, fueleconomy.gov.

I did some quick car shopping on Cars.com for examples of used EVs that might qualify for the $4,000 used EV tax credit. Here are a few cars that I found on my national search:

• 2021 Volkswagen ID.4 Pro with 26,510 miles. Price: $24,855
• 2016 Audi A3 e-tron plug-in hybrid with 51,226 miles. Price: $17,990
• 2021 Chevrolet Bolt EV with 4,647 miles. Price: $23,977

I found plenty of used EVs and plug-in hybrid cars with low mileage and competitive pricing. As part of your online used EV shopping, get price quotes from car insurance companies. It might be cheaper to get insurance for a used EV than a new one.

You can keep your EV battery warranty

People may worry that they won't have enough life left on the battery if they buy used. But EV car batteries typically have a warranty of at least eight years or 100,000 miles. And when you buy a used EV, if your battery still has some time or mileage left under warranty, you're covered too!

Bottom line: If you're tired of paying for gas, and you can charge your EV at home, buying a used EV could help you save significant money in 2024. Depending on the used EV you choose, you could save an extra $4,000 at the dealership.