March 2023 Update: The average transaction price for an EV dropped further in February! Details below.
Car buying is the second biggest expense most consumers will ever make, and more drivers are getting squeezed into $1,000/month car payments. With an EV, you can save hundreds of dollars per month in fuel costs, but the upfront cost of getting into an electric car is substantial. Here’s the average price of an electric car today, and how much prices have increased over the past three years.
Wondering when EVs will get cheaper? We’ll dive into that too.
The Average Price of an Electric Car Is 20% Higher
As of the most recent data from February 2023, the average transaction price for a new car (of any powertrain) was $48,763 according to Kelley Blue Book. At the same time, the average electric car price was $58,385 (for new cars). The average price paid for a new EV declined by 10% since October 2022.
Why did the average price of an EV drop? Tesla slashed prices for new models by up to 20% in January. The same Model Y that started north of $65,000 in late 2022 now sells for about $56,000 with destination, and the rear-wheel drive Model 3 can be bought for about $44,000. Before Tesla dropped prices, the comeback of the Chevy Bolt had already started bringing average EV prices down.
Although the average EV sells for 20% more than gas-powered models, here’s a breakdown of the starting MSRP for the top 10 electric car models on sale right now. As you can see, not all EVs are quite this expensive:
- Tesla Model Y ($54,990)
- Tesla Model 3 ($42,990)
- Ford Mustang Mach-E ($45,995)
- Tesla Model S ($89,990)
- Chevrolet Bolt ($27,495)
- Tesla Model X ($99,990)
- Hyundai IONIQ 5 ($41,450)
- Kia EV6 ($48,700)
- Volkswagen ID.4 ($37,495)
- Ford F-150 Lightning ($56,000)
The average starting price for the top 10 best-selling electric cars in America is $54,509, which is 10% lower than six months prior.
EV Price Trends
In January 2020, the average electric car price was $54,668, or 42% higher than the overall market average. In 2023, the average cost of a new EV is $58,385, or about 20% higher than the overall new car market. That’s a lot better than where the EV marker was in early 2022, when EV prices averaged north of $65,000. Here’s how the average cost of an electric car has changed monthly since January 2020.
| 1-2020 | 2-2020 | 3-2020 | 4-2020 | 5-2020 | 6-2020 | 7-2020 | 8-2020 | 9-2020 | 10-2020 | 11-2020 | 12-2020 | 1-2021 | 2-2021 | 3-2021 | 4-2021 | 5-2021 | 6-2021 | 7-2021 | 8-2021 | 9-2021 | 10-2021 | 11-2021 | 12-2021 | 1-2022 | 2-2022 | 3-2022 | 4-2022 | 5-2022 | June 2022 | July 2022 | August 2022 | September 2022 | October 2022 | November 2022 | December 2022 | January 2023 | February 2023 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Average EV Price | $54,669 | $56,326 | $56,059 | $57,757 | $58,863 | $57,480 | $57,346 | $57,346 | $54,381 | $52,947 | $53,117 | $53,811 | $57,750 | $57,491 | $56,503 | $56,059 | $56,140 | $58,914 | $56,110 | $57,540 | $56,312 | $55,625 | $56,437 | $63,821 | $62,876 | $64,807 | $66,386 | $65,094 | $64,553 | $66,997 | $66,645 | $66,524 | $65,291 | $64,249 | $65,041 | $61,448 | $58,725 | $58,385 |
| New Car Average | $38,747 | $38,550 | $38,812 | $39,904 | $39,138 | $39,731 | $39,512 | $39,571 | $40,159 | $40,770 | $40,937 | $41,335 | $41,248 | $41,366 | $40,680 | $41,172 | $41,534 | $42,633 | $43,056 | $43,418 | $45,031 | $46,026 | $46,329 | $47,243 | $46,404 | $46,082 | $46,223 | $46,676 | $47,275 | $48,043 | $48,182 | $48,301 | $48,094 | $48,281 | $48,681 | $49,507 | $49,388 | $48,763 |
We track EV market share monthly. Here’s where things stand today.
When Will Electric Car Prices Go Down?
Why are EVs so expensive? Batteries aren’t cheap. The average price of a lithium-ion battery pack dropped 90% from 2010 to 2020. One kilowatt-hour of lithium-ion battery storage cost $1,200 in 2010, but prices had fallen to $384 per kWh in 2015, and down to $137 per kWh in 2020. The long-awaited $100/kWh milestone that would bring affordable EVs to all was just around the corner when the pandemic hit.
2021 and 2022 have seen a sharp reversal in battery prices. Industrial grade lithium carbonate sourced from global mines has seen a 400% increase since mid-2021. All of the EV price increases we’ve seen in 2022 hadn’t factored in the most recent lithium price spike. In 2020, the average EV contained just under $4,000 worth of raw materials. By early 2022, that number had climbed to $8,300.
Smaller Battery Packs, More Affordability
However, I think there’s another possibility that I suspect we’ll be hearing more about. Automakers and their supply chain partners (not to mention governments) have invested nearly $1 trillion dollars in electrifying global transportation. It’s been called the second industrial revolution, and one that will largely determine the world’s ability to combat man-made climate change. Automakers don’t want the EV revolution to fail.
But with rising production costs forcing EV prices higher, what could they do to return affordability to the consumer? I expect automakers to begin announcing lower range, more affordable electric vehicles. Less range might leave you skeptical, but remember that $7.5 billion was allocated to creating a national charging network in America.
Aside from federal money, Tesla, Electrify America, EVgo and even automakers themselves are also quickly installing fast chargers throughout the country. In 5 years’ time, range won’t matter nearly as much because chargers will be commonplace.
How might this play out? We’re already starting to see it happen. Volkswagen announced a new version of the ID.4 electric crossover that starts at just $37,495 with 208 miles of range. Plus, it’s made in America and qualifies for the new EV tax credits! That’s well below the longer-range option with 275 miles of range, but it costs at least $4,000 less. Hyundai says it will soon offer a standard range version of the IONIQ 5 with less range at a lower price. I expect General Motors and Ford will soon do the same, especially with future electric crossovers like the impressive Equinox EV.
Thinking of Buying?
Regardless of whether you think an EV might be in your future, CarEdge Car Search is the best way to shop online with more transparent pricing, and auto industry insights dealers don’t want you to see. Check it out today!
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