Alex Lawrence, a dealer in Salt Lake City who specializes in used electric cars, has seen a change in the last year in the types of customers who come to his showroom. They used to be good professionals who could drop $70,000 on a luxury Rivian truck.
Recently, Mr. Lawrence said, customers have bought used Teslas for just over $20,000 after putting in a $4,000 federal tax credit.
“We’re seeing younger people,” Mr. Lawrence said. “We’re seeing more blue-collar and imported whites. The purchase price of the car suddenly became affordable.”
Viewed by conservative politicians and other critics as playthings of the liberal elite, electric vehicles are quickly becoming more affordable. Prices are falling due to increased competition, lower raw material costs and more efficient production. Federal tax credits of up to $7,500 for new electric cars, often topped by thousands of dollars in government incentives, push prices even lower.
At the same time, technology is rapidly improving and making electric vehicles more practical. Cars that can travel more than 300 miles on a fully charged battery are becoming commonplace, and charging times are dropping below 30 minutes. The number of fast chargers, which can charge a battery in less than half an hour, increased by 36% from April 2023 to April 2024.
Automakers including Tesla, Ford, General Motors and Jeep owner Stellantis have announced plans for electric vehicles that will sell new for as little as $25,000.
“The electric vehicle market has reached an inflection point,” said Randy Parker, chief executive of Hyundai Motor America, which will begin producing electric vehicles at a plant in Georgia by the end of the year. “The first adopters have arrived. They have their cars. Now you’re starting to see us move into a mass market.”
That’s all good news for EV advocates and the Biden administration, which aims to have half of new cars sold be electric by 2030 as part of the president’s plan to fight climate change. Even if Republicans gain control of the White House and Congress and follow through on promises to end electric vehicle subsidies, they may not be able to undo the market forces that are pushing prices down.
“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 electric vehicle market to be flat,” said Peter Slowik, who leads the research on passenger cars. cars at the International Council. 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, are still more expensive than gasoline-powered models, costing an average of $55,252 in the United States in April, according to Kelley Blue Book estimates. That’s a 9 percent drop from April 2023, but still about $6,700 more than the average for all vehicles.
But Mr. Slowik’s team estimates that cars and SUVs that can travel 400 miles on a full battery will cost less than cars with internal combustion engines in 2030, even before government subsidies are taken into account. (Trucks, which require larger batteries, will take a bit longer, not reaching parity for 400-mile models until 2033.)
These calculations do not take into account the lower fuel and maintenance costs that strengthen the economic case 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 already be a better deal. At the same time, some automakers are offering heavy discounts on EV models as a lure for buyers.
While prices are clearly on a 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 raise tariffs on them to 25 percent from 7.5 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 fallen over the past 12 months, making electric cars cheaper. But commodity prices could soar again.
The recent slowdown in electric car sales growth has prompted Tesla, Ford and others to delay plans to expand production. However, many analysts expect sales to increase as the plethora of models pushes down prices and as the charging network grows. High prices and the fear of not being able to find a place to recharge are the two biggest reasons people hesitate to buy an electric vehicle, research shows.
For many people, the price of the car is not the only expense to consider. People living in apartments often depend on public charging sockets. Public charging, in addition to being less convenient, tends to be more expensive than charging at home.
However, the forces pushing prices down are strong. Manufacturing costs are falling as traditional automakers, which have been slow to sell electric vehicles, begin to apply decades of experience in mass production to the new technology.
Later this year, for example, General Motors will begin selling an electric version of the 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 pickups and luxury Cadillacs. GM, which has cut costs by using the same batteries and parts for different models, has said its electric vehicles will become profitable in the second half of this year.
Electric cars still cost more to build 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, Mr. Biswas said — for example, eliminating rare minerals from electric motors or replacing copper wiring with aluminum.
At the same time, the cost of building a gasoline-powered car is rising due to stricter emissions regulations. “At some point it will be easier to just move towards EVs,” Mr Biswas said.
Competition is also intensifying. Toyota and other Japanese automakers with a reputation for reliable and economical vehicles have been offering electric vehicles of late. Honda plans to start production of them at an Ohio plant next year.
There will be more than 100 all-electric models for sale in the United States by next year, according to Cars.com, an online sales platform, double the number available last year. “We’re at the point where anybody who wants an EV for a price point can actually get an EV,” said Rebecca Lindland, senior director of industry data at Cars Commerce, which runs Cars.com.
Used car prices are arguably more important than new car prices. Most people buy used cars. A vibrant used market greatly increases the number of people who can consider an electric vehicle.
Tesla, Nissan or GM models have been around for three or more years, creating inventory for dealers as original owners buy new ones. 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 EV 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 electric vehicle tax credit, the price was $11,000. Besides the lure of affordable prices, he noted, his customers like that electric vehicles are quieter than gas-powered models, better for the environment and faster because an electric motor produces instant torque.
“The car is more fun than anything else they drive now,” Mr Lohr said.
