Electric vehicle affordability on the rise as consumers hunt for deals

Electric vehicle prices are plummeting in the U.S. due to lower-than-expected demand. New data indicates that this may be exactly what the segment needs.

Recurrent, an electric vehicle battery analytics firm, tracked a 27% decline in used battery-powered car prices from last April, which pushed the average preowned price tag down to $23,787. In that same timeframe, sales of electrified models have largely disappointed, with industry giants such as Tesla reporting their first year-over-year quarterly sales decline since the onset of the COVID-19 pandemic.

But that may change soon. The decline in the average used electric vehicle price has made these models some of the cheapest on the market. Not only are electric cars cheaper than comparable gas-powered models, but many now qualify for federal used EV rebates of up to $4,000.With the government now offering the capability to apply EV credits at the point of sale, buyers can even put their free cash toward a down payment on their purchase.

Used electric vehicles are not the only segment that has seen weakening prices. Recurrent projects that new battery-powered cars will reach price parity with gas-powered vehicles as soon as this year. This shift would negate one of the most-cited obstacles to EV adoption: affordability.

Lower electric vehicle prices could attract more consumers to the market, driving sales back up and renewing automakers’ sense of urgency amid the energy transition. That being said, the current decline in pricing may not be sustainable in the long term. With a massive share of consumers looking for bargains in the current car market, the supply of affordable EVs is unlikely to last long. However, as demand creeps up, so too will stability, giving both car manufacturers and car buyers a much-needed reprieve from uncertainty.