New and used electric vehicle markets are diverging fast: fresh EV purchases have tumbled, while the used EV market is heating up with prices close to gas cars.
Q1 2026 snapshot
Data from Cox Automotive shows U.S. new electric vehicle (EV) sales dropped 28% year-over-year in Q1 2026 to about 212,600 units (down from 296,304 in Q1 2025). New EV market share fell to an estimated 5.8% of new-vehicle sales. Meanwhile, used EV sales rose 12% year-over-year to roughly 93,500 units, pushing used EV pricing and turnover toward parity with conventional cars.
Why new EV sales fell
The sharp decline in new EV purchases followed the expiration of the $7,500 federal EV tax credit on September 30, 2025. Without that incentive, many buyers are hesitating or choosing alternatives. New EV inventory expanded to about 130 days’ supply — roughly 46% higher than the 89 days’ supply for combustion vehicles — prompting automakers to increase incentives and cut transaction prices. Cox reported an average EV transaction price of about $55,300 in February, narrowing the price gap with gas cars to a record-low.
Used EV market surge
Used EVs are selling faster and becoming much more affordable. Q1 2026 used EV sales reached about 93,500 units, up from 83,587 a year earlier and up 17% from Q4 2025. Average used EV price now sits near $34,821 — only about $1,300 above the average used gas vehicle at $33,487. Days’ supply for used EVs is about 42, almost matching the 38 days for combustion vehicles, indicating genuine demand rather than excess inventory.
What’s driving the used EV boom
- Lease returns: A wave of EVs leased during 2023–2025 is starting to hit dealer lots. Cox projects monthly lease returns to climb to around 240,000 total units, with roughly 20% electric — nearly 50,000 EV lease returns per month at the peak.
- Price competitiveness: With used EV prices close to parity with used gas cars, the total cost of ownership becomes more attractive for budget-conscious buyers.
- Rising fuel prices: Higher gasoline costs are pushing more shoppers to consider electrified options, especially hybrids and affordable used EVs.
Outlook for 2026
Cox Automotive forecasts full-year 2026 new-vehicle sales at about 15.8 million units, down 2.6% from 2025. Lease penetration is expected to fall to 22%, and used retail sales are projected at about 20.4 million. The industry is also absorbing tariff-related costs estimated at $35 billion, equating to roughly $3,800 in extra cost per vehicle — a factor that could make used EVs even more attractive.
Why this matters
The expiration of the federal tax credit has reshaped the EV market quickly: automakers face rising new-EV inventories and weaker new-sales momentum, while buyers benefit from more affordable used EV options. If more drivers experience EVs through cheaper used purchases, the used market could become a major pipeline for future EV adoption — even as automakers contend with tighter margins and shifting incentives.
Conclusion
Q1 2026 highlights a split EV market: new EV sales have fallen sharply without federal support, but used EV availability and near-parity pricing are creating one of the most compelling buying windows for electric cars in recent memory. The coming lease-return wave will likely keep used EVs plentiful and affordable for the next several years.