A new University of Michigan study finds that three-year-old used electric vehicles now offer the lowest lifetime cost of ownership across most vehicle types and cities, often saving drivers thousands of dollars compared with gas cars. The findings could reshape how budget-conscious buyers think about their next used car.
For drivers hunting for a bargain on their next car, the best deal on the lot may now be electric.
New research from the University of Michigan finds that three-year-old used battery electric vehicles, or EVs, have the lowest lifetime cost of ownership compared with similar gas, hybrid and plug-in hybrid models across every major vehicle class.
In one example highlighted by the team, a three-year-old used electric midsize SUV saves its owner about $13,000 over the vehicle’s life compared with buying the same model new with a gasoline engine. A comparable used gas SUV, by contrast, would save only about $3,000 over the same period.
The study, published in Environmental Research Letters, focuses on vehicles bought used at around three years old and driven until they are 10 years old. Researchers looked across body styles and powertrains to see what really costs less once purchase price, fuel or electricity, maintenance, insurance, fees and depreciation are all added up.
“Transportation is the second-largest portion of the average household’s budget and, in the new vehicle market, EVs are usually more expensive,” lead author Maxwell Woody, a research assistant in the U-M Center for Sustainable Systems and the School for Environment and Sustainability, said in a news release. “But 70% of all vehicle purchases are used, and used EVs have the lowest cost of ownership across vehicle classes.”
To get a realistic picture of what drivers actually pay, the team combined several data sources.
They used detailed virtual vehicle models from Argonne National Laboratory to represent different types of cars and SUVs. They pulled monthly gasoline and electricity prices from 17 U.S. cities to capture regional energy costs. And they scraped Craigslist for real-world used car listings posted in 2024, ultimately working with about 260,000 listings after screening millions of raw data points.
That Craigslist effort was led by Sabina Tomkins, an assistant professor in the U-M School of Information. By marrying those real-world prices with Argonne’s technical models, the researchers could estimate purchase prices and depreciation, then layer on recurring costs such as repairs, maintenance, insurance, registration fees and fuel or charging.
The pattern that emerged was stronger than what Woody expected.
“I was surprised by how consistent the result was. I expected EVs would be cheaper in some scenarios, for some cities or vehicle types,” Woody added. “But their costs were consistently lower across all vehicle classes and in almost all the cities.”
The results come at a time when the high sticker price of new EVs has slowed adoption in the United States, even as policymakers and automakers push to cut carbon emissions from transportation. New EVs often cost more up front than comparable gas vehicles, even if they are cheaper to operate.
The new study suggests that the used market is where many drivers can finally tap into those savings.
Senior author Greg Keoleian, a professor in the School for Environment and Sustainability and co-director of the Center for Sustainable Systems, emphasized the climate stakes.
“Encouraging more adoption of EVs is key to decarbonizing the transportation sector and cost is a big factor in purchasing decisions,” he said in the news release. “So this is positive news, I think, for helping encourage consumers to buy EVs.”
Why used EVs are such a deal
The researchers found that the main reason used EVs are such a bargain right now is not just cheaper fuel or fewer oil changes. It is depreciation — how quickly a vehicle loses value after it is first sold.
EVs today tend to lose value faster than comparable gas cars. That is bad news for first owners who bought new, but it creates a discount for second owners who buy used. Those buyers get a much lower purchase price, while still benefiting from EVs’ lower fuel, maintenance and repair costs.
“Electric vehicles have lower maintenance and repair costs than other powertrains, but the initial depreciation of the vehicle is really what drives the savings,” added Woody, especially when the car is purchased at around three years old and kept for several more years.
The study also highlights some important caveats.
Used EVs deliver the biggest savings when owners can do most of their charging at home, where electricity is typically cheaper and more convenient. Drivers who rely heavily on public fast chargers, which can be more expensive, may not save as much.
Regional electricity prices matter, too. In two high-cost cities, Boston and San Francisco, the researchers found that lifetime ownership costs for EVs could creep above those of gas and hybrid vehicles.
Battery condition is another consideration. A used EV’s battery will not have the same range as when it was new, which can be a concern for long-distance commuters or frequent road trippers. For drivers who mostly stay local, though, the study suggests that a used EV can still offer thousands of dollars in lifetime savings.
Looking ahead, the researchers expect today’s unusually steep EV depreciation to ease as electric models become more common, better understood and more trusted in the marketplace. As that happens, the gap in total ownership costs between used EVs and other vehicles may narrow.
That shift will be a mixed bag for buyers.
“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,” Keoleian added. “But if you’re in the market for a used vehicle, it’s very positive news.”
The team is already tracking resale data for 2026 to see how quickly the market is changing.
For now, their message to budget-conscious and climate-conscious drivers is clear: if you are willing to buy used and your driving patterns fit an EV’s range, the numbers increasingly favor going electric.
Source: University of Michigan