When Will Electric Cars Be Affordable?

When Will Electric Cars Be Affordable?

The average transaction price of a new electric car in April 2023 was $64,029, according to Edmunds data. Plug-in hybrid electric vehicles fared a little better, with an average transaction price of $59,258. Compare either of those figures to the average transaction price for a traditional gas-powered vehicle, which was $47,664 in the same month. Interestingly, the average transaction price for hybrid vehicles was the least expensive, at $39,347. The price gap between electric vehicles and gas-powered vehicles is still very wide and remains a barrier to many people.

But if you look at it from a battery cost perspective, the data shows the opposite. According to the U.S. Office of Energy Efficiency and Renewable Energy, EV battery costs have dropped by nearly 90% since 2008. It attributes that decline in cost to “improvements in battery technologies and chemistries, and an increase in manufacturing volume.” In this sense, the most expensive part of an EV is the most affordable it has ever been.

The average EV owner vs. everyone else

For now, the vast majority of EV owners are middle-aged, have a college degree, make more than $100,000 a year, and own more than one vehicle, according to a 2021 study from the Fuels Institute. Most EV owners also live in single-family homes and are able to charge their EV in their garage or driveway.

These characteristics obviously aren’t representative of most people in the U.S. When you look at the median (meaning the halfway point) wages of full-time and salary workers, weekly earnings were about $1,100 in the first quarter of 2023, according to the U.S. Bureau of Labor Statistics. Assuming 52 weeks of work, this would translate to $57,200 a year. In this scenario, buying an electric car at the average price of $64K would cost more than a year’s salary in over half the households in the U.S. We would never advise someone to buy a car with a price greater than the person’s annual salary. In this scenario, the average electric car is not affordable to the average person.

Electric cars that are more affordable

While the average price remains above $64,000, the good news is that a number of EVs are priced well below that. These options open the door to affordability for a lot more people. With this in mind, we’ve gathered a list of electric cars that are selling below $64K. We’re using average transaction prices as they reflect what people are actually paying for vehicles, and they can fall above or below MSRP. Note that this list reflects a snapshot in time. It is subject to change as more vehicles enter the market or prices fall on existing models. You won’t find Tesla models on this list even though some models may qualify because the automaker does not share its transaction data.

EVs selling under the average transaction price of $64,029

Make Model ATP
Cadillac Lyriq $63,205
Polestar Polestar 2 $62,422
Mercedes-Benz EQB $60,170
Ford E-Transit Cargo Van $59,945
Ford Mustang Mach-E $59,621
Audi Q4 e-tron $58,934
Volvo XC40 Recharge Twin Pure Electric $58,106
Kia EV6 $56,323
Volvo C40 Recharge Twin Pure Electric $55,356
Hyundai Ioniq 6 $54,310
Hyundai Ioniq 5 $53,802
Volkswagen ID.4 $50,530
Toyota bZ4X $50,311
Nissan Ariya $49,952
Kia Niro EV $43,791
Hyundai Kona Electric $37,921
Chevrolet Bolt EUV $34,915
Nissan Leaf $34,123
Chevrolet Bolt EV $31,162

*Certain low-volume EVs, such as the Mazda MX-30 and Subaru Solterra, should qualify for this list but we don’t currently have sufficient data to include them.

**This list reflects data from the month of April 2023.

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