Why Government Incentives for Used EVs Make No Sense

David Shultz

David Shultz reports on clean technology and electric vehicles, among other industries, for dot.LA. His writing has appeared in The Atlantic, Outside, Nautilus and many other publications.

Why Government Incentives for Used EVs Make No Sense

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When the Inflation Reduction Act (IRA) passed last fall, much was made about the revamped electric vehicle tax incentive structure for new car purchases. Specifically that buyers would be eligible for up to a $7,500 rebate. But legislators also added language to the law that would create incentives for used EV sales. Naturally, this facet of the policy was largely ignored. That said, the used car market is typically around double that of new sales, meaning the rules for used EVs outlined in the IRA will have major implications for the country’s transition to an electrified auto fleet…eventually.


Like much of the IRA’s EV tax rebate system, the used vehicle portion aims to help lower income citizens enter the EV market. It provides tax credits of up to $4,000 for the purchase of a used EV. There are a host of qualifications about the nature of such a sale, but the big one for the purposes of the discussion here is that the vehicle must be sold for less than $25,000.

Which, according to John Helveston, a researcher at George Washington University, who studies electric vehicle pricing incentives, could be a major issue. Helveston says that while this policy rule make sense for the future, when there are plenty of EVs on the road and the market has reached something close to a supply/demand equilibrium, it doesn't address the current used car market. Not only did COVID disrupt automotive supply chains, it also changed how we work and how much we drive. In 2020, Americans bought 15% fewer new cars than in 2019. With the influx of new vehicles, the used car market went through the roof, with the average sale prices up 43% as of July 2022.

The situation for electric vehicles has been even worse. With most manufacturers only starting to release their first or second EV, supply has been incredibly constrained. The wait time for an F-150 Lightning is currently at least a year. If you order a Rivian today, your wait time could range from a few months to several years. This has led to many EV owners deciding to sell their vehicles on the used market for more than the MSRP. Combine all this with the fact that the average new EV is still $66,000, and it quickly becomes apparent just how few used EV sales are going to qualify for the $25,000 ceiling outlined in the Inflation Reduction Act.

Joseph Yoon, a Consumer Analyst at Edmunds, says that the number of used EV sales below $25,000 is so small that the company doesn’t even have good data on it. “It's gonna be very hard to try to find an EV that qualifies,” says Yoon. “It's just kind of where the market is.”

Helveston says it will likely take at least several more years for the used market to swing back towards a supply/demand equilibrium. But once that happens, there’s good reason to expect EV prices to fall fast. He points to the Nissan Leaf as an example. “The first one, just 10 years ago, only had 75 miles [of range], the newest one has over 200 miles.” In other words, Helveston says, “When the newest tech is so much better than last year’s, people want the newer one.”

More to his point, Yoon says that Edmunds is already beginning to see this trend in EV lease prices. “The two biggest things that affect the lease price is residual value, and what the automaker considers the car's going to be worth at the end of the lease term,” says Yoon.

But while most internal combustion engine vehicles are typically worth around 50–60% of their new value after a 3-year lease, the same isn’t true for EVs. “What I'm seeing with a lot of [used] EV lease deals is that they’re getting marked at under 50%.” While this faster-than-usual depreciation may be troubling for EV buyers, it also suggests that there may be relief coming to the used EV market soon.

For now, Yoon says the industry is looking to California to see how things shake out. Used cars tend to be resold in close geographic proximity to where they were originally purchased, meaning the Golden State will also play host to the largest and earliest used EV market in the United States. While the tax incentives in the Inflation Reduction Act don’t currently seem to offer much for used EV purchases, Helveston points out that the policy is aimed at transitioning the country off of fossil fuels over the next two decades, not the next two months. “I don't expect these supply chains to be wrecked forever,” he says. “I think sometime in the next five years, we're gonna see supply ramping up very quickly.”

If he’s right, the IRA’s $25,000 cap may turn out to be a prescient limit that really does help get lower income residents into EVs.

Big Wins: Dodgers Take the Title ⚾, ChatGPT Levels Up🚀

🔦 Spotlight

Happy Friday, LA! It’s been a week of big wins, on and off the field. 🎉

⚾️ First up, let’s talk Dodgers. With a thrilling 7-6 comeback victory over the Yankees in Game 5, the Dodgers clinched their eighth World Series title, their first since 2020. The city is buzzing, and fans are ready to celebrate! A parade kicks off this morning at 11 a.m., starting at City Hall and winding down to Flower Street, with a ticketed celebration at Dodger Stadium for those wanting to keep the festivities going.

Image Source: Dodgers

💻 Meanwhile, in the tech, OpenAI just rolled out a game-changing update for ChatGPT. Plus and Enterprise users can now access real-time internet search, powered by Microsoft Bing, bringing ChatGPT's responses fully up-to-date. This means users can now ask about the latest news, hotspots, or recent LA startup announcements, and ChatGPT will pull in fresh, relevant answers directly from the web. Previously limited to information up to 2021, ChatGPT’s new browsing capabilities make it a valuable digital assistant for anyone needing real-time insights in fast-paced industries like tech and entertainment.

Image Source: ChatGPT

🔍 The real-time search feature also includes “Browse with Bing,” allowing ChatGPT to source information from multiple sites for detailed answers to complex questions. Whether you’re exploring the latest venture capital trends in LA or curious about the best local spots, ChatGPT’s new browsing power helps you stay ahead with the latest info. This leap forward in AI functionality makes ChatGPT even more versatile and powerful for everyone, from business owners to everyday users.

From the Dodgers’ World Series win to OpenAI’s latest ChatGPT update, there’s a lot to celebrate in LA this week. Here’s to champions, innovation, and a city that’s always pushing boundaries. 🌆✨


🤝 Venture Deals

LA Companies

  • Final Boss Sour, a Los Angeles-based gaming-themed snack company specializing in healthier sour snacks, has raised a $3M Seed funding round led by Science Inc. to expand its product offerings and operational capabilities. - learn more
LA Venture Funds
  • Smash Capital led a $50M Series B round for Read AI, a productivity-focused AI company, bringing its total funding to $81M. The company offers a platform that enhances meeting efficiency through features like note-taking, summarization, and transcription. Additionally, Read AI introduced "Read AI for Gmail," a free Chrome extension that integrates information from various applications, reducing the need to switch between apps. The funds will be used to increase the company's headcount in engineering, data science, and business teams. - learn more
  • Distributed Global participated in a $25M funding round for Nillion, a company that provides decentralized privacy solutions designed to secure sensitive data using advanced technologies like secure multi-party computation. - learn more
  • Act One Ventures participated in a $5M Seed funding round for Latii, a construction materials supply chain startup, to enhance its platform that connects contractors with suppliers, aiming to streamline procurement processes and reduce costs in the construction industry. - learn more
  • SmartGateVC participated in a pre-seed funding round for Ritual Dental, a company revolutionizing dental care by integrating advanced technology and microbiome science to provide personalized, preventive treatments. - learn more

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      Billion-Dollar Milestones and Snapchat’s New Features

      🔦 Spotlight

      Happy Friday Los Angeles!

      This week’s spotlight showcases LA’s thriving tech scene, featuring Snapchat’s latest feature updates and two local startups Liquid Death and Altruist, making TechCrunch’s Unicorn List for 2024.

      Image Source: Snap

      Snapchat’s recent fall updates bring fresh features, including a new iPhone camera shortcut for instant snaps, Halloween-inspired AI-powered Lenses, and Bitmoji costumes inspired by Mean Girls and Yellowstone. Bitmoji stickers now reflect trending Gen-Z expressions like “slay” and heart symbols for added flair in chats. Plus, the “Footsteps” feature on Snap Map allows users to track their past adventures privately, adding a nostalgic touch.

      Image Source: Liquid Death

      ICYMI, two LA startups joined the Unicorn Club—achieving valuations over $1 billion. Liquid Death, based in Santa Monica, is a canned water company with edgy branding and a humorous sustainability focus. Known for viral marketing and brand partnerships, it redefines bottled water as a lifestyle brand and environmental statement. In March, Liquid Death closed $67 million in strategic financing, raising its total funding to over $267 million and valuing it at $1.4 billion.

      Image Source: Altruist

      Altruist, a Culver City-based fintech platform, offers financial advisors streamlined tools to better serve their clients. With a user-friendly investment and account management platform, Altruist has gained strong traction in the finance world. In May, it announced a $169 million Series E funding round, bringing its total funding to over $449 million and earning a valuation of $1.5 billion.

      Together, Liquid Death and Altruist exemplify LA’s capacity for innovation across diverse sectors, from lifestyle branding to fintech. Whether reshaping financial tools or redefining sustainable branding, these companies showcase LA’s unique entrepreneurial spirit. Go LA!

      Check out TechCrunch’s 2024 Unicorn List here. And don’t miss Snapchat’s latest features—perfect for adding some fun, connection and maybe a few selfies this weekend!


      🤝 Venture Deals

      LA Companies

      • Freeform, a company bringing AI to metal 3D printing, raised $14M in funding from NVIDIA’s NVentures and AE Ventures to further develop its AI-powered 3D printing technology for industrial-scale production. - learn more
      LA Venture Funds
      • Anthos Capital participated in a $70M Series D round for Carbon Robotics, which develops AI-powered robotics for precision agriculture, and the funding will be used to accelerate the growth of its autonomous weeding technology. - learn more
      • Anthos Capital participated in a $3.5M seed round for Plasma Network, aimed at expanding access to USDT stablecoins on the Bitcoin network, with the investment supporting the network’s growth and efforts to enhance stablecoin accessibility through the Lightning Network. - learn more

      LA Exits


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          ⚖️FTC’s "Click to Cancel" Rule and Its Ripple Effect on Tech

          🔦 Spotlight

          Happy Friday Los Angeles,

          The FTC’s new “Click to Cancel” rule is shaking up subscription-based tech. Now, instead of navigating a maze of cancellation hurdles, users can cancel subscriptions as easily as they signed up—with a single click. This shift is a wake-up call for SaaS, streaming, and app-based companies, where once-hidden exit options often kept users around simply because canceling was a hassle.

          The rule also requires businesses to send regular renewal reminders, ensuring customers stay informed about upcoming charges. It's more than a cancellation button—it’s about transparency and giving users control over their decisions.

          For startups, the impact goes deeper than UX adjustments. Many have relied on "dark patterns," which subtly discourage cancellations by hiding the exit. Now, companies must shift toward building genuine loyalty by delivering real value, not by complicating exits.

          While this might affect retention rates initially, it could lead to more sustainable business models that rely on satisfaction-driven loyalty. Investors may start prioritizing companies that emphasize transparent, long-term engagement over those that depend on dark patterns to maintain retention metrics.

          The rule opens the door to more ethical UX design and a truly user-centered approach across the tech industry. It may even set a precedent against manipulative design in other areas, such as privacy settings or payment methods.

          Ultimately, the “Click to Cancel” rule presents an opportunity for the tech industry to foster trust and build stronger customer relationships. Startups and established companies that embrace transparency will likely stand out as leaders in a new era of customer-centric tech, where trust—not tricky design—is what retains users.

          As the tech landscape continues to evolve, LA Tech Week 2024 offers a chance to explore these shifts in real-time. Check out the upcoming event lineups to stay informed and make the most of your time:

          For updates or more event information, visit the official Tech Week calendar.


          🤝 Venture Deals

          LA Companies

          • Ghost, a company supporting top brands and retailers with streamlined logistics and fulfillment solutions, raised a $40M Series C funding round led by L Catterton to fuel its continued growth and innovation. - learn more

          LA Venture Funds
          • Assembly Ventures participated in a $27M Series A round for Monogoto, a provider of software-defined connectivity solutions that enable secure, cloud-based IoT and cellular network management on a global scale. - learn more
          • Angeleno Group participated in a $32M Series C round for REsurety, a company that recently launched an innovative clean energy marketplace aimed at providing better financial and operational insights to support renewable energy transactions. - learn more

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