Prices for electric cars were at a record high when the first federal used EV incentives were created in August 2022. Few used EVs had prices low enough to qualify so it seemed unlikely that people could take advantage of the generous credits. 

Fast forward two years, and a lot has changed. 

Prices on used EVs are down as much as 40% from their peak, making them the bargain of the auto world. At least 25,000 used EVs have been purchased with the help of the federal tax credit as of July 2024. That number should also double by the end of the year. 

Which used cars are getting an extra $4000 off? 

It’s no surprise that the top manufacturers on this list are those that have been making long range EVs the longest. Tesla has two of the top vehicles – Model 3 and Model S – and Chevrolet has three in the top 10. Together, these two brands are about 50% of the tax credit queries. 

Recurrent has data on the cars – including specific VINs – that people are checking for tax credit eligibility. As a reminder, the qualifications for a car to be eligible for the $4K tax credit are:

1. Price under $25,000  - this now makes up 30% of total pre-owned EV inventory
2. The manufacturer has to have registered the VIN with the IRS
3. The sale must go through a dealer registered with the IRS
4. This sale must be the first since August 16, 2022 
5. Model year has to be at least two years old 

When we look at the model years most likely to be eligible for the tax credit, it turns out that it isn’t mostly older cars. 

Curious why there are so many relatively recent model years on that list? It turns out that older model year vehicles are more likely to have been sold since August 15, 2022, making them ineligible for the credit. 

Volkswagen e-golfs, Ford Fusion Energi, BMW i3, Kia Souls, Chevy Sparks, Mercedes Plug-in hybrids, Tesla Model Xs, and Mitsubishi Outlander PHEVs were the most likely to have failed eligibility based on previous sales. 90% of cars that are ineligible due to previous sales are from 2013 - 2016.

When we look at the data on a more granular level, factoring in the car’s model and model year, we see the top ten eligible combos are all Chevys and Teslas:

1. 2022 Tesla Model 3
2. 2020 Chevrolet Bolt EV
3. 2021 Tesla Model 3
4. 2018 Tesla Model 3
5. 2019 Tesla Model 3
6. 2020 Tesla Model 3
7. 2017 Chevrolet Bolt EV
8. 2022 Chevrolet Bolt EUV
9. 2021 Chevrolet Bolt EV
10. 2017 Chevrolet Volt

The Model Year Eligibility Criteria

Since one of the requirements for eligibility is that a car’s model year is at least two years old, something exciting happens on January 1. A whole crop of 2023 EVs potentially become eligible for tax credits, provided they meet the other criteria. 

Between 2021 and 2022, around 1.6 million EVs were sold in the US. In 2023, nearly the same amount were sold again. When all those 2023 vehicles are resold, the used EV market will double in size - with potentially double as many tax credit eligible vehicles. 

Are you in the market for a new-to-you EV? Are you a dealership curious what models to stock up on? Here are some of the models that may be eligible come January 1, 2025, along with their current inventory volume and average listing price.

Remember that the listing price is often higher than the sale price, and that lower trim levels are usually less expensive than average.