Used EVs offer lowest lifetime costs

Now is a great time for those shopping in the used car market to consider an electric vehicle, according to new research from the University of Michigan.

In assessing the lifetime ownership costs of used vehicles with different body styles and powertrains, the researchers found that completely electrified candidates offered the greatest savings. 

For example, compared with a new midsized SUV with an internal combustion engine, a 3-year-old used EV version offered a lifetime savings of $13,000, according to the new study published in Environmental Research Letters. Meanwhile, compared with that same new vehicle, a used internal combustion engine vehicle, or ICEV, would offer a lifetime savings of only $3,000.

“Transportation is the second-largest portion of the average household’s budget and, in the new vehicle market, EVs are usually more expensive,” says Maxwell Woody, the lead author of the study. “But 70% of all vehicle purchases are used and used EVs have the lowest cost of ownership across vehicle classes.”

Woody is a research assistant at the U-M Center for Sustainable Systems (CSS) and the School for Environment and Sustainability (SEAS).

Kicking the virtual tires

To analyse lifetime ownership costs, the team used virtual vehicle models from Argonne National Laboratory, monthly gas and electricity prices from 17 US cities, and data from Craigslist ads for used cars posted in 2024. Sabina Tomkins, assistant professor at the U-M School of Information, led the team’s cohort that gathered the Craigslist data, which included 260,000 listings after screening 4-million raw data points. 

Combining the real-world information with Argonne’s models enabled the researchers to assess the purchase price of a vehicle. The total cost of ownership was then determined by combining purchase and depreciation data with data gathered for recurring costs including fees, repairs, insurance, maintenance and fuelling or charging in different parts of the country.

“I was surprised by how consistent the result was. I expected EVs would be cheaper in some scenarios, for some cities or vehicle types,” says Woody. “But their costs were consistently lower across all vehicle classes and in almost all the cities.”

Senior author Greg Keoleian, a professor at SEAS and co-director of the CSS, says that although the comparatively high cost of new EVs has limited their adoption in the US, this study could help more drivers choose used vehicles with lower carbon emissions.

He says: “Encouraging more adoption of EVs is key to decarbonising the transportation sector and cost is a big factor in purchasing decisions. So this is positive news, I think, for helping encourage consumers to buy EVs.”

The study’s authors include Antara Green and Christian Hitt at CSS and Sally Yin and Alexander Liu at the School of Information. The study was supported by the Responsible Battery Coalition.

Appreciating depreciation

While EV’s low cost of ownership is the take-home message of the study, the team’s analysis also revealed some notable caveats and considerations. 

For instance, used EVs cut costs the most when drivers can do the majority of their charging at home. That means drivers who can’t install a home charger or who need to charge a lot on the road won’t save as much. The team found that EVs’ lifetime cost of ownership could creep above ICEVs and hybrids in two cities, Boston and San Francisco, because of their high electricity costs.

The team acknowledged concerns about the battery performance of a used EV, which won’t match a new EV’s in terms of capacity and range. Thus, used EVs may not be a fit for long-haul drivers, but can offer thousands in lifetime savings for drivers who largely stay local. And that advantage is primarily fuelled by how quickly EVs currently lose value compared with other powertrains.

Woody says: “EVs have lower maintenance and repair costs than other powertrains, but the initial depreciation of the vehicle is really what drives the savings.”

As EV adoption becomes more common, the depreciation gap would shrink and the playing field would become more level across powertrains. But, for now, depreciation is creating a bargain for anyone considering a used EV.

Keoleian says: “It’s not the most positive news if you’re in the market for a new EV, knowing that your resale value may be impacted by the faster depreciation. But if you’re in the market for a used vehicle, it’s very positive news.”

The researchers have started monitoring resale data for 2026 to keep an eye on this trend moving forward.