CNN –
Due to growing competition in the market and some consumer reluctance, automakers and car dealers are offering huge discounts on electric vehicles, especially luxury models.
The ranks of eager early adopters, those who feel they need to have the latest technology in their vehicles, already own electric vehicles, said Joseph Yoon, consumer insights analyst at Edmunds. Automakers need to appeal to more mainstream consumers with different priorities.
Hybrid models – with well-known and proven technology that doesn’t require charging stations – are attracting much greater interest from consumers, said Pat Ryan, chief executive of car shopping app company CoPilot. Unlike electric vehicles, hybrid vehicles sell for more than their sticker price and quickly disappear from dealers, according to Edmunds data.
“The adoption curve for hybrids is much further along,” Ryan said.
For a long time, Tesla had the electric vehicle market largely to itself. Now Tesla is increasing pricing pressure on electric vehicles, aggressively cutting prices as it tries to maintain its outsized market share with an aging model lineup. For example, the base sticker price for a Tesla Model 3 has dropped 17% over the past year. Other automakers, especially luxury brands, are now also selling electric vehicles at deep discounts.
In September 2022, the average electric vehicle purchased in the United States was Excluding Teslas, it cost about $1,500 over sticker price. (Keep in mind that the manufacturer’s suggested retail price or sticker price for most new vehicles is only a suggestion, with the final sales price usually higher or lower.) A year later, the average electric vehicle cost about $2,000 less than the sticker price on data by Edmunds. That’s a much bigger change – and a much bigger discount – than for the industry as a whole. According to Edmunds, the average new vehicle sold for just about $900 less than the sticker price overall last month.
In pure dollar terms, the average price for a non-Tesla electric vehicle actually rose slightly last year. Electric cars tend to be expensive, partly because the market for electric vehicles is heavily focused on luxury brands such as Audi, BMW and Mercedes. Even among mainstream brands like Volkswagen and Hyundai, electric vehicles tend to be among the more expensive models. But electric vehicle buyers are now getting a lot more vehicles for their money.
According to Edmunds, customers who bought the Audi E-Tron GT, for example, with an average sticker price including options of nearly $119,000, received discounts of more than $7,200. However, it’s not just extremely expensive electric vehicles. According to Edmunds, the Volvo XC40 Recharge sells with an average sticker price of about $61,000 with discounts averaging about $7,750.
These rebates do not include government tax incentives, Yoon said.
Due to various restrictions, many electric vehicles are not eligible for tax credits when purchased. However, according to Alison Flores of the Tax Institute at H&R Block, a quirk of the tax law eliminates most restrictions when a vehicle is leased rather than purchased, including caps on the vehicle’s price. With a lease, the tax credit goes to the leasing company, which technically “owns” the car. The leasing company can then pass it on to the consumer in the form of reduced leasing payments. Edmunds’ pricing analysis doesn’t take these types of incentives into account, Yoon said, so the tax credit is in addition to the rebates listed here.
Generally, the highest discounts are available on vehicles with the highest sticker prices. But consumers can still score significant discounts on non-luxury electric vehicles. For example, the average discount on a Volkswagen ID.4 is about $2,900 and the discount on the Nissan Ariya averages about $2,200. These vehicles still aren’t exactly cheap, with sticker prices hovering around $50,000, but with rebates and tax credits, they end up costing about the same or even a little less than the average new vehicle.
Since you can essentially add $7,500 in tax credits to many of these electric car rebates, that also means that some already very cheap electric cars that sell around sticker price, like the Chevrolet Bolt, actually come with pretty steep rebates too sold.