Alex Lawrence, a Salt Lake City dealership specializing in used electric cars, has seen a change over the past year in the type of customers who come to his showroom. They were well-heeled professionals who could spend $70,000 on a Rivian luxury van.
Recently, Mr. Lawrence said, customers have purchased used Teslas for just over $20,000, after applying a $4,000 federal tax credit.
“We’re seeing younger people,” Mr. Lawrence said. “We’re seeing more blue-collar and white-collar entry-level workers. The purchase price of the car suddenly became affordable.”
Seen by conservative politicians and other critics as toys of the liberal elite, electric vehicles are quickly becoming more accessible. Prices are falling due to increased competition, lower raw material costs and more efficient manufacturing. Federal tax credits of up to $7,500 for new electric cars, often augmented by thousands of dollars in state incentives, drive prices down further.
At the same time, technology is rapidly improving and making electric vehicles more practical. Cars capable of traveling more than 300 miles on a fully charged battery are becoming common, and charging times are falling below 30 minutes. The number of fast chargers, capable of recharging a battery in less than half an hour, increased by 36% between April 2023 and April 2024.
Automakers including Tesla, Ford, General Motors and Jeep-owner Stellantis have announced plans for electric vehicles that would 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 factory in Georgia by the end of the year. “The first followers have arrived. They have their cars. Now you’re starting to see us move into a mass market.
All of this is good news for electric vehicle advocates and for the Biden administration, which aims for half of new cars sold to be electric by 2030 as part of the president’s plan to combat climate change. Even if Republicans take control of the White House and Congress and follow through on their promises to dismantle electric vehicle subsidies, they may not be able to undo the market forces that drive prices down.
“There might be some hiccups in the exact pace and scale of EV sales if there are major policy changes, but I wouldn’t expect the EV market to stagnate,” said Peter Slowik, who leads passenger car research at the United Nations International Council. Clean Transportation, a research organization. “Most automakers are committed to an all-electric future, and many are planning a timeline that extends well beyond the next administration. »
Electric cars, whose sales have slowed in recent months, remain more expensive than gasoline models, costing an average of $55,252 in the United States in April, according to estimates from Kelley Blue Book. That’s down 9% from April 2023, but it’s still about $6,700 more than the average for all vehicles.
But Mr. Slowik’s group estimates that cars and sport-utility vehicles capable of going 400 miles on a full battery will cost less than cars with an internal combustion engine in 2030, even before taking into account subsidies. governmental. (Pickup trucks, which require larger batteries, will take a little 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 financial argument for electric vehicles. Electricity almost always costs less 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 deep discounts on electric vehicle models to entice buyers.
Even if prices are clearly trending downward, risks exist. 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. These batteries will become more expensive as the Biden administration announced in May that it would increase tariffs on these batteries from 7.5% to 25%.
Many companies are building battery factories in the United States and Canada, but most of them won’t 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. But many analysts expect sales to recover as a glut of models drives down prices and the charging network expands. High prices and fear of not being able to find a place to charge are the two main reasons people are hesitant to buy an electric vehicle, surveys show.
For many people, the price of the car is not the only expense to consider. People living in apartments often rely on public charging sockets. Public charging, in addition to being less convenient, tends to be more expensive than home charging.
Yet the forces pushing prices down are powerful. Manufacturing costs are falling as traditional automakers, which have been slow to sell electric vehicles, begin to apply their decades of mass production experience to the new technology.
Later this year, for example, General Motors will begin selling an electric version of its 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 federal tax credit. $500. 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 set of components that can be used for a variety of vehicles, including pickup trucks and luxury Cadillacs. GM, which has cut costs by using the same batteries and parts for different models, said its electric vehicles would become profitable in the second half of this year.
Electric cars still cost more to make 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 to produce cars more efficiently, Mr. Biswas said — for example by eliminating rare minerals from electric motors or replacing copper cables with aluminum.
At the same time, the cost of manufacturing a gasoline car is increasing due to stricter emissions regulations. “At some point it will be easier to move towards electric vehicles,” Biswas said.
Competition is also intensifying. Toyota and other Japanese automakers known for offering reliable and affordable vehicles are belatedly offering electric vehicles. Honda plans to start producing them at a factory in Ohio next year.
There will be more than 100 all-electric models on 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 now where anyone who wants an electric vehicle at a reasonable price can actually get an electric vehicle,” said Rebecca Lindland, senior director of industry data at Cars Commerce, which operates Cars.com.
The prices of used cars are undoubtedly higher than those of new cars. Most people buy used cars. A vibrant used market significantly increases the number of people who can consider an electric vehicle.
Tesla, Nissan or GM models have been on the road for three years or more, generating inventory for dealers as original owners purchase 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 electric vehicle market.
Jesse Lore, owner of Green Wave Electric Vehicles in North Hampton, NH, recently sold a used Chevrolet Bolt for $15,000. After applying a federal tax credit for used electric vehicles, the price was $11,000. Besides the appeal of affordable prices, he noted, his customers like that electric vehicles are quieter than gasoline models, better for the environment and faster because an electric motor generates instant torque.
“The car is more fun than anything they drive now,” Mr. Lore said.