August 10, 2023

Is Buying an Electric Vehicle Becoming More Affordable?

Even as electric vehicles grow more popular, many consumers are still holding out for the sticker price to be right. However, with a handful of automakers following Tesla’s price cuts throughout this year, along with federal and state incentives, some say that EVs are quickly approaching general affordability in the U.S. public.

Above: A Nissan Leaf (Image: Casey Murphy / EVANNEX).

Despite many price increases on EVs in 2022, this year began with Consumer Reports saying how EVs were quickly becoming more affordable. Since then, as Yahoo Finance reported earlier this month, sticker prices on EVs have become even cheaper.

A number of companies have followed Tesla in its sweeping price cuts made throughout the year, including Chevrolet, Hyundai, Nissan, Ford and others still. The price reductions on EV sticker prices have ranged from $3,000 to $19,000 across automakers, and many have stated that Tesla has waged a "price war" on the rest of the auto industry.

The several price cuts from Tesla have forced widespread price reductions in the industry, making EVs more affordable for consumers. Darren Globe, lead writer and owner of online publication EVehicle Pro, recently pointed to the industry-wide price cuts as a significant factor making EVs more affordable in 2023, along with falling prices on raw minerals and other cost-cutting factors

“Major car companies like Nissan, Hyundai and Chevrolet are cutting their EV prices in order to compete with EV leader Tesla, which has cut its prices several times over recent months,” Globe wrote.

“Lower EV prices reflect the dropping cost of lithium and advancements in battery chemistry,” Globe says. “Increased demand has forced EV car makers to scale up production and reduce costs.”

Last year, Tesla increased prices multiple times as it faced disruptions to the global supply chain, as the outlet TopSpeed has explained. This year, however, the company has cut prices on all of its models by up to 20 percent, and every Model 3 and Model Y trim has also become eligible for the full $7,500 federal tax credit.

Additionally, falling costs on raw materials are making it easier for companies to lower EV prices, according to Globe. As demand for EVs has grown, he explains, production has also increased significantly, making some room for lower costs. As the EV leader, Tesla has opened several new facilities in the past few years, including those in Austin, Texas, Berlin, Germany, and Shanghai, China.

As for other automakers, new EV battery plants have been announced by General Motors, Hyundai and a number of others in recent months. Over time, these should help drive down material costs, but even the current market has a handful of affordable EVs to offer.

As Yahoo Finance points out, “the low end of the EV price spectrum is getting crowded.” For many, the price on a new EV may be right, and that trend’s only going to continue as the industry grows over the next several years.

Below are a number of new vehicles with sub-$30,000 sticker prices, as listed by Yahoo Finance before federal, state and local incentives.