There are plenty of reasons not to buy an electric vehicle in 2024: Auto loan rates are high. Despite a recent wave of discounting, many EVs remain pricier than gas-burning cars. And an incomplete network of sometimes glitchy chargers has stoked drivers’ “range anxiety” about running out of juice.
But while the all-electric market is slowing, sales are forecast to keep rising. Cox Automotive expects EVs to comprise 10% of the United States’ vehicle market by the end of the year, up from 7.6% last year — when domestic sales hit a record 1.2 million — and 5.9% in 2022. And first-time EV adopters are still powering the expansion, with LexisNexis Risk Solutions telling NBC News that 3 in 4 new EVs are driven by people switching from a combustion-engine vehicle.
Here’s what to know if you’re considering buying this year.
Tax credits cover fewer models, but without the wait
Car shoppers can still expect to be rewarded for going electric, thanks to tax breaks from the Inflation Reduction Act, but the rewards won’t be as widespread.
The law’s tax incentives are limited to EVs whose batteries aren’t substantially built in certain foreign countries, particularly China, or with minerals sourced there. The number of models eligible for the full federal tax credit of $7,500, or partial $3,750 credit, shrank from 43 last year to fewer than 15 that comply with criteria on the books currently. The punted models include popular picks like the Tesla Model 3 and the Nissan Leaf.
And income caps still apply: Individuals making over $150,000 annually or couples bringing in $300,000 qualify for the credits, which stop at electric sedans over $55,000 and SUVs and trucks over $80,000.
“Maybe you’re a person who’s overwhelmed with all the choices, and if you start with a smaller list, that helps you out,” said Alison Flores, a manager at H&R Block’s Tax Institute. But “if you’re really into the technology or certain nuances and you were looking at a certain thing, you may be disappointed,” she conceded.
One “pretty major” change taking effect this year, Flores noted, is that consumers can now apply their full federal tax credit right away at dealerships, rather than having to wait to file their taxes to receive it.
The rule “allows the dealer who you purchased the vehicle from to essentially advance you the tax credit,” she said, which can reduce financing costs for buyers taking out auto loans.
Lower prices and local incentives can add up to bigger savings
Auto experts said the mix of federal and state incentives, at a time when many EV prices are falling, could allow customers in some places to drive a new or used EV off the lot for as little as $10,000 this year.
Tesla and GM have slashed prices on some electric models to spur demand as inventories have piled up. Cox said those price cuts helped bring average EV prices down nearly 18% over the course of last year. They are now nearing price parity with gas cars, the firm said: At the end of 2023, the average EV cost, even after factoring in the more expensive Tesla models, was $50,789, within spitting distance of the average gas vehicle at $48,759.
Edmunds, an online car shopping resource, put the average price of a used EV at $50,000 as recently as December 2022 but now estimates it at about $37,000.
“Strangely enough, it’s one of the few areas where you can get a great deal right now,” said Joseph Yoon, a consumer insights analyst at Edmunds. “A lot of dealers are seeing that demand for EVs has kind of cooled. So there are discounts on top of the federal stuff.”
This year may also be a better time to go pre-owned, said Turner. “Normally we think that EVs are just for people who are pretty well off. But the tax incentives, especially for used EVs, are definitely opening up the market to more consumers,” he said.
While the IRA’s used EV credit took effect last year — offering buyers 30% off the car’s purchase price, up to $4,000 — some states and municipalities have since launched their own incentive programs.
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