Amid Sluggish EV Sales Growth, Potential for Drivers to Acquire Electric Vehicles for as Low as $10,000 in 2024
In 2024, there are various reasons to Amid Sluggish hesitate before purchasing an electric vehicle (EV). High auto loan rates, persistent pricing disparities with gas-powered cars despite recent discounts, and an incomplete and occasionally unreliable charging infrastructure continue to contribute to consumer apprehension, commonly referred to as “range anxiety.” However, despite these challenges, the electric vehicle market is expected to witness continued growth.
Amid Sluggish
Cox Automotive projects that EVs will constitute 10% of the United States’ vehicle market by the end of the year, a notable increase from 7.6% in the previous year and 5.9% in 2022. Interestingly, first-time EV adopters remain a driving force behind this expansion, with LexisNexis Risk Solutions revealing that three out of four new EVs are purchased by individuals transitioning from combustion-engine vehicles.
Tax credits remain a potential incentive for those considering EVs, thanks to the Inflation Reduction Act. However, these rewards are now more selective, with the law restricting tax incentives to EVs produced without significant battery components from certain foreign countries, particularly China. The number of models qualifying for the full federal tax credit of $7,500 or partial $3,750 credit has decreased, leaving fewer than 15 options that meet the specified criteria. Furthermore, income caps still apply, limiting eligibility for individuals earning over $150,000 annually or couples with an income exceeding $300,000. These credits cease for electric sedans priced over $55,000 and SUVs/trucks exceeding $80,000.
A narrower selection of EVs eligible for tax incentives may encourage more consumers to consider leasing as an alternative. Jay Turner, an environmental studies professor, suggests that leasing might become a more attractive option for consumers, as many of the excluded vehicles still qualify for discounts under leasing agreements.
An important change in 2024 is that consumers can now apply their full federal tax credit immediately at the dealership, reducing the financial burden by allowing dealers to advance the tax credit without the need to wait for tax returns.
Lower prices, combined with federal and local incentives, present an opportunity for significant savings. Tesla and GM have reduced prices on some EV models to boost demand, contributing to an average 18% reduction in EV prices over the past year, bringing them closer to parity with traditional gas vehicles. Some industry experts suggest that customers in certain locations could potentially drive off with a new or used EV for as little as $10,000 this year.
The used EV market is also becoming more accessible to a wider range of consumers due to tax incentives. While the Inflation Reduction Act’s used EV credit came into effect last year, offering a 30% discount, up to $4,000, on the purchase price, additional incentive programs from states and municipalities further contribute to the appeal of purchasing a used electric vehicle in 2024.
