First, the good news: As electric vehicles climb in popularity, consumers have more options at better prices.
Now, the bad news: The average price for all new nonluxury cars — electric or otherwise — was $44,584 in late 2022, according to Kelley Blue Book, an automotive pricing guide. Add in rising interest rates, and the average car payment is now over $700 per month.
In other words, people in the market for a new EV stand at the crosswinds of two opposing trends: an increasing number of EV options under “average” prices but an “average” that has risen swiftly.
Are EVs becoming more affordable?
A decade ago, the cheapest Tesla — one of only a few all-electric cars available in the U.S. — was a Model S; it cost $52,400. The cost of a Model S has nearly doubled since to a starting price of $89,999, but the company has introduced the Model 3, with a longer range than the 2013 Model S, for less than $44,000.
That example mirrors the EV market over the past couple of years. The number of models available has multiplied. EV sales jumped from 488,397 in 2021 to 809,739 in 2022, according to Cox Automotive, an auto data company. The technology in the vehicles has also improved; dozens of models now have ranges above 200 miles, while in 2013, only a few EVs could travel more than 100 miles.
So, sure, plenty of EVs are beyond the budget of many car shoppers. But, in general, average EV prices are nearing equivalency with the price of average gas-powered cars, and the lowest-cost EVs today have specs that would have been out of reach just a few years ago.
Rebates can bring down prices
To qualify, you must be below income limits: No higher 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 rebate exceeds the amount you owe, but it will bring a tax bill of up to $7,500 down to $0 if you qualify for the max amount.
Not all cars qualify: Factors like price, weight, battery size and manufacturing location determine whether an EV qualifies. The IRS maintains an index of cars that do.
EVs available for under $40,000
The EVs below all 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 ranges above 200 miles, which makes them more capable of taking on longer trips with fewer charging stops — important if you don’t also have a gas-powered car.
Note that the price you pay at a dealer might not match the MSRP. The prices shown are for base models, but the model you see at a dealer might be a different trim level — which means additional, but costlier, features. Fees, like the cost of delivering a vehicle to the dealership, and market adjustments can increase your final price. However, MSRP doesn’t take into account potential savings from a federal rebate if you and your vehicle qualify. Rebates could cut the price by about a quarter for the lowest-cost options.
Cars under $30,000
2023 Chevrolet Bolt
Range: 259 miles
2023 Nissan Leaf
Range: 212 miles
SUVs under $40,000
2023 Hyundai Kona
Range: 258 miles
Range: 275 miles
2023 Kia Niro
Range: 253 miles