As EV sales growth slows, some drivers could buy one for just $10,000 this year

There are many reasons not to buy an electric car in 2024: Car loan interest rates are high. Despite a recent wave of discounts, many electric vehicles are still more expensive than their gasoline counterparts. An incomplete network of chargers sometimes fails, exacerbating drivers’ “range anxiety” about running out of charge.

Although the all-electric market is slowing, sales are expected to continue growing.Cox Automotive Electric vehicles are expected to account for 10% of the U.S. auto market That’s up from 7.6% at the end of this year, when domestic sales reached a record 1.2 million units, and 5.9% in 2022. And first-time EV adopters are still driving expansion, with LexisNexis Risk Solutions telling NBC News that 34 new EVs are being driven by people switching from internal combustion engine vehicles.

If you’re considering buying this year, here’s what you need to know.

Thanks to the Inflation Reduction Act tax breaks, car buyers can still expect to receive incentives for purchasing electric vehicles, but the incentives won’t be as broad.

The law’s tax benefits are limited to EVs whose batteries are essentially not produced in some foreign country, notably China, nor do they come from Chinese minerals. The number of models eligible for the full federal tax credit of $7,500 or the partial tax credit of $3,750 dropped from 43 last year to fewer than 15 that currently meet the book’s standards. The eliminated models include popular models such as Tesla Model 3 and Nissan Leaf.

Income caps still apply: Individuals making more than $150,000 a year or couples making $300,000 a year are eligible for points, limited to electric sedans over $55,000 and SUVs and trucks over $80,000.

“Maybe you’re someone who feels overwhelmed by all the options, and it would be helpful if you started with a smaller list,” said Alison Flores, manager of H&R Block Tax Institute. Helps.” But “if you really like the technology or some of the nuances and you’re paying attention to something, you might be disappointed,” she admits.

Jay Turner, a professor of environmental studies at Wellesley College and author of “Charging: Lessons from the History of Batteries and a Clean Energy Future,” said the narrowing of electric vehicle options eligible for tax incentives could prompt more consumption Investors turn to leasing.

He said many excluded vehicles would still qualify for discounts when leasing because the U.S. Treasury Department considers leasing electric vehicles a business transaction, exempting those vehicles from certain IRA rules.

“This may be a more attractive strategy for many consumers in the coming years,” Turner said.

Flores noted that one “pretty significant” change that takes effect this year is that consumers can now claim the full federal tax credit immediately at a dealership rather than having to wait to file their taxes to receive it.

The rule “allows the dealer where you purchase the vehicle to essentially give you a tax credit,” which can lower financing costs for buyers who take out auto loans, she said.

Tesla and General Motors have As inventories pile up, prices of some electric models have been slashed to stimulate demand. cox says Last year, these price cuts brought the average electric vehicle price down by nearly 18%. The company says they are now close to price parity with gas-powered vehicles: By the end of 2023, even taking into account more expensive Tesla models, the average cost of an electric vehicle will be $50,789. Within spitting distance of general gas trucks Price is $48,759.

Online car shopping resource Edmunds had pegged the average price of a used electric vehicle at $50,000 in December 2022, but now estimates it to be about $37,000.

“Oddly enough, this is one of the few areas where deals are available right now,” said Joseph Yoon, a consumer insights analyst at Edmunds. “Many dealers are seeing demand for electric vehicles cool off. So, in addition to federal products In addition, there are discounts.”

This year may also be a better time to buy a used car, Turner said. “Usually we think electric vehicles are only for those who are wealthy. But tax incentives, especially for second-hand electric vehicles, will definitely open the market to more consumers,” he said.

While the IRA’s used electric vehicle credit went into effect last year — offering buyers 30 percent off the vehicle’s purchase price, up to $4,000 — some states and municipalities have since launched their own incentive programs.

Turner’s back-of-the-envelope calculations suggest that a consumer in California or Massachusetts who wants a used Chevrolet Bolt with 30,000 miles and a sticker price of $20,000 can get it for about $10,000, thanks to stackable federal and state credits. The price to buy it — “That’s crazy,” he added. “And I think a lot of people who are in the market for a $10,000 car don’t think electric vehicles are readily available.”

In some areas, discounts may be greater.Colorado, for example, allows residents who meet a certain income threshold to purchase gas-powered vehicles Tax credits of up to $6,000. Qualifying buyers in the state can stack up available incentives to take home a new Chevrolet Bolt for a four-digit price.

Using the same incentives — a $7,500 federal tax credit, a $7,500 state tax credit and a $6,000 vehicle exchange program — strategic Coloradans could theoretically get a Tesla for $14,000 Model 3.That is, if the company Requalify for the list.

Turner noted that leased Teslas can still take advantage of the full tax credit, while Hertz currently for sale Its rental fleet has Model 3s priced as low as $20,000. He said matching tax credits for qualified buyers could lower the cost to between $13,000 and $18,000, “which is a pretty good deal when a used Toyota Corolla is in the same price range.”

On Thursday, the Biden administration announced $623 million in new appropriations Funding 47 electric vehicle charging programs in 22 states and Puerto Rico. The move is a tacit recognition of the need to upgrade and expand the charging network, but its limited range and reliability have put off many current and future EV drivers.

“All the early adopters, all the people who live in big cities and can charge easily, they’re buying electric cars now,” Yin said. “Now manufacturers have to find a way to get ordinary people, if they want to, to buy cars. . ”

Some people find that driving an electric vehicle outside major metropolitan areas is a risky proposition, given the lack of chargers in less populated areas. But Turner said consumers “should be optimistic that there will be a better charging experience this year.”

major car manufacturers Deal struck with Tesla last year Access its network of Superchargers, which are designed to allow electric vehicles to travel hundreds of miles in an hour or less. As of last July, the company operated 1,900 Supercharger stations across the country with 10 times the number of connectors.

As part of the deals, Ford and GM will provide connector adapters to EV owners, and they will begin integrating Tesla’s unique plug into their new models in 2025.

Correction: Electric vehicle sales growth is slowing. An earlier version of this article incorrectly described the nature of the changes.