Electric vehicle prices are tumbling. Here's how they now compare with gas-powered cars.
Prices on electric vehicles are tumbling as dealership lots are filling up with more models amid cooling consumer demand. The result is that EV prices, in some cases, are approaching those of gas-powered cars, after adding in federal tax credits.
The average price of a new EV in May was $56,648, according to Kelley Blue Book, or about 15% lower than two years earlier, when the average price was $65,000. Meanwhile, used EV prices plunged to $28,767 last month, representing a 42% decline from $40,783 a year earlier, according to iSeeCars.
Prices are falling, in part, because EV sales have hit a plateau in the past year or so, Jenni Newman, the editor-in-chief of Cars.com, told CBS News. Still, the sticker prices on EVs tend to be higher than those of gas-powered cars, although that gap is narrowing as dealers cut prices on electric-powered vehicles.
"So we're seeing inventory build up, both on the new side and the used side, which means there are deals to be had," she said.
While a record 1.2 million EVs were sold in the U.S. last year, according to Cox data, experts expect 2024's sales to remain at about that level.
Federal tax credits of up to $7,500 for new EVs and up to $4,000 for qualifying used EVs are helping convince some Americans to buy electric. After applying these credits, EV prices are even closer to that of gas-powered cars, with new models of the latter selling for an average price of about $45,000, Newman noted.
Dealership supply
The number of EVs available for sale was limited three years ago as automakers battled a shortage of semiconductor chips. But once those supply chain woes vanished, automakers revved up their production to keep pace with Americans' growing demand for EVs.
Today, dealerships now have about 117 EVs available on their lots for a typical 45-day supply, compared to 78 gas-powered vehicles and 54 for hybrids, according to data from CarGurus.
The auto industry is betting big on EVs, with automakers spending billions of dollars to retrofit their factories to produce battery-powered vehicles. As the number of EV options expand, automakers are turning to price cuts to convince customers to buy the eco-friendly vehicles.
Over its lifetime, an EV produces 50% less CO2 than a gas-powered vehicle, while a hybrid cuts those emissions by 25%, according to the National Renewable Energy Laboratory. Decarbonizing the nation's fleet of gas automobiles would take longer if consumers choose hybrids over EVs.
Prices are also falling at a time when Americans appear to be losing interest in EVs. A survey this month from consulting firm McKinsey found that nearly half of U.S. drivers who bought an EV plan to switch back to a gas-powered vehicle.
A separate AAA survey found declining interest in purchasing electric vehicles, with only 18% of U.S. adults saying they are likely to buy an EV, down from 23% last year. The main concerns cited by consumers are EV's high costs, limited charging infrastructure and range anxiety, the survey concluded.
Newman said the lack of charging locations is still a major concern for EV drivers, but automakers and local governments have launched programs to increase the number of stations.