First, the good news: As electric vehicles climb in popularity, consumers have more options at better prices.
Now, the bad news: According to automotive pricing guide Kelley Blue Book, the average price for all new non-luxury cars — electric or otherwise — was $44,584 at the end of 2022. Add in rising interest rates, and the average car payment now exceeds $700 a month.
In other words, those in the market for a new EV stand on the crosswinds of two opposing trends: an increasing number of EV options under “average” prices but an “average” that has risen sharply.
Are EVs Getting More Affordable?
A decade ago, the cheapest Tesla – one of only a few all-electric cars available in the US – was a Model S; Its price was $52,400. The Model S has nearly doubled in price since its $89,999 starting price, but the company is offering the Model 3 for less than $44,000 less than the 2013 Model S.
That example reflects the EV market over the past few years. The number of available models has increased manifold. According to auto data company Cox Automotive, EV sales are projected to increase from 488,397 in 2021 to 809,739 in 2022. Technology in vehicles has also improved; Dozens of models now have a range of more than 200 miles, whereas in 2013, only a few EVs could travel more than 100 miles.
So, of course, many EVs are beyond the budget of many car shoppers. But, in general, average EV prices are going to be comparable to the cost of average gas-powered cars, and even the lowest cost EVs today have specs that would have been out of reach just a few years ago.
Discounts can bring down prices
To qualify, you must be below the income limits: no more than $150,000 for individuals or $300,000 for married couples filing jointly.
The tax credit is nonrefundable: You won’t get a refund check if the exemption exceeds the amount you owe, but it will reduce your tax bill to $0, up to $7,500 if you qualify for the maximum amount.
Not all cars qualify: Factors such as price, weight, battery size and manufacturing location determine whether an EV qualifies. The IRS maintains a list of cars that do.
EVs Available for Under $40,000
The EVs below have a manufacturer’s suggested retail price, or MSRP, of $40,000 or less, under the $44,584 price tag of the average new car sold in 2022. They also have a range of upwards of 200 miles, which enables them to go on longer trips with fewer charging stops—which is important if you don’t even have a gas-powered car.
Note that the price you quote to the dealer may not match the MSRP. Prices shown are for the base model, but the model you see at the dealer may be a different trim level—which means additional, but costlier, features. Fees, such as the cost of delivering the vehicle to the dealership, and market adjustments can increase your final price. However, the MSRP does not take into account the potential savings from federal rebates if you and your vehicle qualify. Rebates can cut the price by almost a quarter for the lowest cost options.
Cars Under $30,000
SUVs Under $40,000