If you’re in the market for an electric vehicle (EV), you’re in luck. Thanks to growing competition and changing consumer preferences, automakers and dealers are offering significant discounts on EVs, particularly luxury models. While early adopters once dominated the EV landscape, today’s market caters to a more diverse group of consumers with varying priorities.
Hybrid vehicles, offering a known and trusted technology that doesn’t rely on charging infrastructure, are now gaining considerable attention among buyers. According to Pat Ryan, CEO of car shopping app company CoPilot, hybrids are selling above their sticker prices and moving swiftly off dealer lots. This contrasts with EVs, where significant price reductions have become the new norm.
Historically, Tesla held a near-monopoly in the EV market. However, the competition is intensifying, and Tesla is under pressure to maintain its market share while dealing with an aging model lineup. As a result, the base sticker price of the Tesla Model 3 has dropped by a substantial 17% in the past year. Luxury automakers are following suit, offering compelling discounts on their EVs.
In September 2022, the average non-Tesla EV in the United States was selling for approximately $1,500 above its sticker price. A year later, that same vehicle was going for about $2,000 below the sticker price. This significant shift represents a deeper discount than what’s typically observed across the automotive industry. In comparison, the average new vehicle overall was selling for only approximately $900 below its sticker price last month, based on data from Edmunds.
Despite the average price of non-Tesla EVs seeing a slight increase over the past year, it’s essential to consider the context. Electric cars tend to be more expensive, primarily due to the dominance of luxury brands in the EV market, including Audi, BMW, and Mercedes. Even mainstream brands like Volkswagen and Hyundai offer relatively pricey EV models. However, what’s noteworthy is that buyers are now getting a lot more vehicle for their money.
For instance, customers purchasing the Audi E-Tron GT, with an average sticker price of nearly $119,000, received discounts exceeding $7,200, according to Edmunds. These substantial discounts aren’t exclusive to high-dollar EVs; more affordable models like the Volvo XC40 Recharge, with an average sticker price of about $61,000, come with average discounts of approximately $7,750.
Moreover, these discounts often don’t include government tax incentives, which can further reduce the cost of EV ownership. While various restrictions can limit the eligibility of certain EVs for tax credits when purchased, a notable tax law quirk comes into play when leasing an EV. Alison Flores of the Tax Institute at H&R Block explains that most restrictions, including price caps, are lifted when leasing. In this scenario, the tax credit benefits the leasing company, which can then pass the savings on to the consumer in the form of reduced lease payments.
While the discounts mentioned here don’t encompass tax incentives, the combination of substantial discounts and tax credits makes for an enticing proposition for prospective EV buyers.
Typically, the most extensive discounts are associated with high-priced vehicles, but there are noteworthy deals to be found among non-luxury EVs as well. For example, the average discount for a Volkswagen ID.4 is around $2,900, while the Nissan Ariya averages about $2,200. While these vehicles may not be budget options with sticker prices around $50,000, after applying discounts and tax credits, they often end up costing about the same, or even less, than the average new vehicle.
Considering that many of these EV discounts can be supplemented with a $7,500 tax credit, some already affordable EVs, such as the Chevrolet Bolt, are essentially being sold at substantially reduced prices, making them highly attractive options for cost-conscious buyers.
In conclusion, the landscape of electric vehicle purchasing is evolving, and substantial discounts, coupled with tax incentives, have made the market more accessible and appealing to a broader range of consumers. With the price of EVs becoming increasingly competitive, this may be an opportune time for potential buyers to transition to electric mobility.
