Alex Lawrence, a Salt Lake City dealer who specializes in used electric cars, has seen a shift over the past year in the types of customers who come to his showroom. They used to be wealthy professionals who could spend $70,000 on a Rivian luxury pickup truck.
Recently, Lawrence said, customers have been buying used Teslas for just over $20,000, after applying a $4,000 federal tax credit.
“We’re seeing younger people,” Lawrence said. “We’re seeing more blue-collar and entry-level white-collar people. Suddenly, the purchase price of the car is within reach.”
Considered by conservative politicians and other critics as toys of the liberal elite, electric vehicles are rapidly becoming more accessible. Prices are falling due to increased competition, lower raw material costs and more efficient manufacturing. Federal tax credits of up to $7,500 for new electric cars, often augmented by thousands of dollars in state incentives, drive prices down even further.
At the same time, technology is improving rapidly and making electric vehicles more practical. Cars that can travel more than 300 miles on a fully charged battery are becoming common and charging times are falling below 30 minutes. The number of fast chargers, which can recharge a battery in less than half an hour, grew by 36 percent between April 2023 and April 2024.
Automakers including Tesla, Ford, General Motors and Stellantis, the owner of Jeep, have announced plans for electric vehicles that would sell new for as little as $25,000.
“The electric vehicle market has reached an inflection point,” said Randy Parker, CEO of Hyundai Motor America, which will begin producing electric vehicles at a factory in Georgia at the end of the year. “The first users have arrived. They have their cars. “Now you’re starting to see us transition into a mass market.”
This is all good news for EV advocates and for the Biden administration, which aims for half of new cars sold to be electric by 2030 as part of the president’s plan to combat climate change. Even if Republicans gain control of the White House and Congress and make good on their promises to dismantle electric vehicle subsidies, they may not be able to undo the market forces that are putting downward pressure on prices.
“There may be some hiccups in the exact pace and scale of EV sales if there are major policy changes, but I wouldn’t expect the EV market to stabilize,” said Peter Slowik, who leads auto research at passengers at the International Council on Clean Transportation, a research organization. “Most automakers are committed to an all-electric future and many are planning a timeline that goes well beyond the next administration.”
Electric cars, whose sales have slowed in recent months, remain more expensive than gasoline models: They cost an average of $55,252 in the United States in April, according to Kelley Blue Book estimates. That’s a 9 percent decrease from April 2023, but still about $6,700 more than the average for all vehicles.
But Slowik’s group estimates that cars and sport utility vehicles capable of traveling 400 miles on a full battery will cost less than cars with internal combustion engines in 2030, even before taking government subsidies into account. (Pickup trucks, which require larger batteries, will take a little longer and won’t reach parity with 400-mile models until 2033.)
Those calculations don’t take into account the lower fuel and maintenance costs that bolster the financial argument for electric vehicles. Electricity is almost always cheaper per mile than gasoline, and battery-powered vehicles don’t need oil changes, engine air filters, or spark plugs. For people who drive a lot, electric cars may be a better option. At the same time, some automakers are offering deep discounts on electric vehicle models as an incentive for buyers.
Although prices have a clear downward trend, there are risks. China supplies more than half of the lithium-ion batteries used in cars sold in the United States, according to Interact Analysis, a research firm. Those batteries will become more expensive because the Biden administration announced in May that it would increase tariffs on them from 7.5 percent to 25 percent.
Many companies are building battery factories in the United States and Canada, but most of them will not produce enough batteries to replace China for several years.
Raw materials are another risk. The price of lithium and other materials needed for batteries has plummeted in the last 12 months, making electric cars cheaper. But commodity prices could soar again.
The recent slowdown in electric car sales growth has led Tesla, Ford and others to delay their plans to expand manufacturing. But many analysts expect sales to increase as a glut of models drives down prices and the charging network grows. High prices and fear of not being able to find a place to charge are the two main reasons why people hesitate to buy an electric vehicle, surveys show.
For many people, the price of the car is not the only expense to consider. People who live in apartments often rely on public charging outlets. Public charging, in addition to being less convenient, is usually more expensive than charging at home.
Still, the forces pushing prices down are powerful. Manufacturing costs are falling as traditional automakers, which were slow to sell electric vehicles, begin to apply their decades of mass production experience to the new technology.
Later this year, for example, General Motors will begin selling an electric version of its Chevrolet Equinox sport utility vehicle that will have a range of more than 300 miles and sell for less than $30,000 after the $7,500 federal tax credit. And the company plans to sell an even cheaper car, a new Chevrolet Bolt, next year.
The Equinox and Bolt will be built on GM’s Ultium platform, a collection of components that can be used for a variety of vehicles, including luxury trucks and Cadillacs. GM, which has cut costs by using the same batteries and parts for different models, has said its electric vehicles will be profitable in the second half of this year.
Electric cars still cost about 10 percent more to make than cars with internal combustion engines, said Prateek Biswas, an analyst at Wood Mackenzie, a research firm. But costs will come down as companies learn how to produce cars more efficiently, Biswas said, for example by removing rare minerals from electric motors or replacing copper wiring with aluminum.
At the same time, the cost of manufacturing a gasoline car is rising due to stricter emissions regulations. “At some point it will be easier to move towards electric vehicles,” Biswas said.
Competition is also intensifying. Toyota and other Japanese automakers with reputations for offering reliable, affordable vehicles are belatedly offering electric vehicles. Honda plans to start producing them at an Ohio factory next year.
According to Cars.com, an online sales platform, there will be more than 100 all-electric models on sale in the United States next year, double the number last year. “We’re at a point where anyone who wants an electric vehicle for a certain price can get it,” said Rebecca Lindland, senior director of industry data at Cars Commerce, which operates Cars.com.
Used car prices are arguably more important than new car prices. Most people buy used cars. A vibrant second-hand market greatly increases the number of people who may consider an electric vehicle.
Models from Tesla, Nissan or GM have been on the roads for three years or more, building inventory for dealers as original owners purchase new models. More than half of the used electric vehicles on the market sell for less than $30,000, according to Recurrent, a research firm that focuses on the used electric vehicle market.
Jesse Lore, owner of Green Wave Electric Vehicles in North Hampton, NH, recently sold a used Chevy Bolt for $15,000. After applying a federal used EV tax credit, the price was $11,000. In addition to the appeal of affordable prices, he noted, his customers like that electric vehicles are quieter than gasoline models, better for the environment and faster because an electric motor generates instant torque.
“The car is more fun than anything they drive now,” Lore said.