The Parity Paradox
May 1, 2026
Alex KiersteinEVs were close to price parity last year, and used EV sales are exploding now. But price parity isn’t the whole question.
It’s easy to empathize with EV skeptics. EVs are generally more expensive and less convenient—fast-charging is expensive and sometimes a hassle, but not everyone has a place to charge at home or work. There are persistent concerns (some valid, some less so) that also deter interest. The severity of these concerns can be gauged, more or less, with our current situation: used EV sales are booming, and one reason is that average used EV values are within $1,000 of average used gas car prices. In other words, an experiment in real time is playing out about how regular consumers value EVs—raise the price of gas modestly and people who were on the fence about EVs might be more willing to accept compromises to avoid pump prices.
There are a few things coloring the situation, but federal tax credits are not a factor—recall there used to be a used EV credit of up to $4,000, but that died with the new car tax credit. So the playing field is more level. High gas prices are driving interest, which demonstrates some working knowledge among consumers of how inexpensive it can be to recharge EVs. The lower lifetime running costs (in most places, for most charging scenarios) and maintenance costs are a nice bonus—one that perhaps consumers aren’t factoring in as much, focusing instead on purchase price, but that’s not an EV-specific issue.
This is interesting for a few reasons. For one, EV resale values have been low for a while, due to a number of factors. Tesla Model 3 price cuts, and fleets like Hertz dumping Teslas on the market, brought the whole used EV market down. There is also pernicious consumer doubt about the risk of potential battery degradation and expensive battery replacement, even though these fears are less rooted in reality than we previously thought.
The positive part of all this is that used EV prices are closer to parity with equivalent gas cars than ever before. Last August, Cox Automotive via CNBC found that the delta between the used EV average and the used gas car average was just under $1,000 thanks to some quirks in the EV market. Many EVs were leased, because of the tax credit loophole, and a glut of off-lease used EVs has helped keep prices low. CNBC also notes that a JD Power study found that interest in EVs was relatively unaffected by the tax credit expiring.
The result is a percentage decline in new EV sales that is paralleled by a percentage increase in used EV sales, according to Cox Automotive data. For Q1, new EV sales are down 27% YOY, but used EV sales are up 12%—and with even more off-lease EVs coming to market, and a lack of a clear resolution to oil transit through the Gulf of Hormuz, it wouldn’t be a stretch to imagine that Q2 used EV sales might be even stronger.
Not that used EV sales are that large a slice of the used car market—only 2% in the most recent data I can find—but analysts agree the share is growing. This is up 28% compared to the same period last year. And remember that the used vehicle market dwarfs the new vehicle market. So 2% of used sales is more significant than it might appear.
I think the used EV boom, the spike before the tax credit expiration, and steeply discounted new EVs reinforce my theory that price, above all else, is the key for a lot of consumers. It’s showing us roughly the total price (averaging in the mid-$30k range), and the delta between internal combustion and EV vehicles (around $1,300), that buyers will accept. Some used EVs are less expensive than their internal combustion equivalents, too.
I don’t know if automakers can yet profitably build the EVs that people will actually buy, but this moment in the used EV market seems to reveal that EV intenders want a deal, and a lower absolute price, than the $50k or so average price of a new EV.
I think this is good news for Chinese automakers with interest in selling vehicles in the US, either directly or through a joint venture with an established player. In Europe, very inexpensive EVs, like the Dacia Spring, are several thousand dollars below the $20,000 mark. Would Americans buy tiny, very austere EVs if they undercut a Corolla by $8,000? Or a well-equipped but small EV that achieved MSRP parity with a Corolla?
I don’t think EVs are going away, and I also think Mary Barra is right: EVs are the end goal. They are superior in efficiency to even the most advanced parallel hybrid. With a few advancements to remove pain points, they’re objectively a better driving and ownership experience for most drivers in most locations—this is backed up by sky-high satsifaction surveys. And at some point, maybe, they’ll be cheaper than gas or hybrid vehicles. When that happens, things will get very interesting.
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