Home
Expert Insights
Recommendations

Electric Cars Are 20 Percent Cheaper Than a Year Ago

By
Laurance Yap
and
4
min
Apr 2024
While electric cars are still a little more expensive than their gasoline counterparts, data from Kelley Blue Book shows that average new EV prices dropped almost 20 percent compared to last year, making them more affordable than ever. Is now the time to buy or lease?
Person making a purchase, holding their phone and credit card.
Share:

EV Prices Approach Industry Average

Since their introduction over a decade ago, electric cars have generally been more expensive to buy than regular gasoline cars, even if their maintenance and overall ownership costs are lower. But according to industry price watcher Kelley Blue Book, the price for an average new electric car dropped by almost 20 percent in June 2023 – moving much closer to the average transaction price for the industry.

Driven largely by price cuts from Tesla, which represents over half of electric car sales, the average transaction price (ATP) for electric vehicles was $53,438 – a drop from $54,528 in May 2023, and down from $66,390 just a year ago. That’s a huge drop in prices, and a huge improvement in affordability, even if the average electric car still comes at about a $5,000 premium (the ATP for the industry in June 2023 was $48,808).

Better Manufacturer Financial Incentives

Further good news for electric car buyers comes in the form of financial incentives being offered by manufacturers to move metal. As supply chain restrictions have started to ease, and with inflation and high interest rates deterring potential buyers, inventory on dealer lots increased in the first six months of the year. Manufacturer incentives averaged $2,048 in June 2023, the highest in a year, representing 4.2 percent of the average transaction price of a vehicle. EVs had even higher incentives available, averaging 7.1 percent of the average transaction price.

While improved affordability for potential EV buyers is good news, the other side of the coin is that electric cars aren’t selling at the same pace they were. Indeed, sales of electric cars have slowed more than the industry average. Days’ supply, the industry measure for how long cars sit in dealer stocks before they sell, was 103 days for electric cars at the end of June, while the industry average day’s supply was 53.

Person holding calculator and money in the background

Tesla Price Cuts Drive Lower Average Prices

"The steep drop in average EV prices this year, led by Tesla price cuts, has been a key driver of overall, industry-wide price moderation," said Michelle Krebs, executive analyst at Kelley Blue Book. "A year ago, the average EV price was above the average luxury vehicle price. Today, as inventory and availability build, EV prices are moving closer to the industry average."

Interestingly, Tesla, which makes premium-priced products, also had an effect on the average transaction price of luxury vehicles in June. Luxury car prices were down about 2 percent year over year, and down more than 4 percent since the start of the year. That’s largely because Tesla has had multiple price cuts, slashing MSRPs by more than 11 percent since the start of 2023. In June, the average Tesla buyer spent $55,106 for a new vehicle, down from more than $62,000 in January 2023.

Man smiling and looking at his laptop with his credit card

When Is the Best Time to Buy an Electric Vehicle?

What does all of this mean for you? If you’re interested in making the switch to electric, now may be the right time to make a move. With dealer stocks increasing, manufacturer incentives improving, and average prices coming down, it’s a buyer’s market for EV intenders. While fewer vehicles are eligible than before for the $7,500 federal tax incentive if you purchase or finance, you can still access the incentive if you lease.

The GreenCars buyer’s guide can help find the right electric car for your needs, and our incentive tool will provide useful information on the financial incentives available in your area.