What will happen to used EV prices after the rebate ends?

Question:

What would you expect happen to used EV prices after the rebate ends, specifically for vehicles currently being sold at or below the 25k cutoff and those currently valued above the cutoff. It seems like there are a number of opposing influences at play.

Answer:

Upward pressure on prices is expected from the removal of the wedge between prices received and paid, resulting in fewer quantities transacted in the market. This would hurt both buyers and suppliers, but free up taxpayers’ money. You might also consider the impact of the rebate termination for new EVs. If new EV buyers are more likely to buy used EVs, then the used EV demand would shift up, resulting in a further increase in price paid. On the other hand, you might expect an opposite effect if you think that the EV market size itself would fall because people are less confident in the future of the EV sector, shifting down the overall EV demand.