Data Shows Electric Vehicles More Affordable in 2024

A recent Automotive News report has revealed that electric vehicles are cheaper in 2024 compared to previous years. Even though battery electric vehicle (BEV) sales have seen a notable fall in recent months, data from the report shows that EVs are easier to buy this year. According to the report, this is largely due to the 2022 Inflation Reduction Act, a landmark bill that invested significantly into America’s green-energy sector.

Battery electric vehicles have been more expensive than gas-powered cars for most of the EV industry’s existence, a barrier to EV adoption that the United States and other countries have used subsidy programs to overcome for the past decade. The July Automotive News report says many automakers have seen their EV sales increase, thanks to leasing loopholes and electric vehicle tax credits. The Inflation Reduction Act (2022) spurred billions of dollars’ worth of investment plans in local EV battery factories, electric vehicle assembly plants, and mines for EV battery materials.

J. D. Power data shows that EV transaction prices have fallen by an average of $8,600 from before the IRA was passed (Q1 2022) to $57,584 in Q1 2024. Furthermore, average EV lease transaction prices fell by $5,900 to $33,553. The drop in purchase and lease transaction costs affected both Tesla and legacy automakers. Tesla’s price discount war with Chinese automakers is still affecting prices in the U.S. electric vehicle market as local automakers also cut their prices in an attempt to remain competitive.

An EV leasing loophole that grants a $7,500 tax credit has been especially instrumental in increasing EV leases. The IRA’s Commercial Vehicle Credit allows all kinds of lessors to pass the $7,500 credit to their clients, allowing more consumers to access the credit through EV leases rather than outright purchases. This saves drivers around $1,900 in their costs when they lease electric cars, bringing non-Tesla electric vehicle lease penetration to slightly over 60% while some BMW and Audi EV models have around 90% penetration.

Cox Automotive director of industry insights Stephanie Valdez Treaty says the EV leasing loophole is available to all drivers regardless of MSRP, where EV battery minerals are mined, or income bracket, and notes that it will continue to encourage EV leases. Despite the rise in EV sales, automakers are still taking losses to keep their EV divisions running due to the generally high costs involved in electric vehicle development. Cutting their prices over the past several months has only widened these losses, and many of them are now stepping back from their ambitious electrification plans.

Now is the time for numerous startups such as Nikola Corporation (NASDAQ: NKLA) to prove their resilience and establish themselves as go-to brands in the electric-vehicle industry.

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