Electric cars will become cheaper in 2023 for U.S. car owners. That’s large because a flood of lower-priced electric vehicles will hit the market, while new government subsidies will make pricier models more affordable.
In 2022, EVs nearly doubled their share of the U.S. auto market, despite supply chain issues and inflation. For example, EVs accounted for 5.3% of all U.S. auto sales in the first 10 months of 2022, up from 2.9% a year earlier. New electric vehicle registrations in the U.S. hit 604,638, up more than 60% from a year earlier, according to information service Experian. Analysts such as Morgan Stanley’s Adam Jonas expect EVs to reach 11% of the market by 2025.
Most new EVs on sale are above $50,000, and there’s still huge room for growth at the premium end of the market. “There is still plenty of room for growth in the $30,000+ premium EV segment to meet portfolio goals for at least the next 10 years,” said Bill Newman, head of SAP’s North American automotive business.
But beyond expanding EV charging networks and increasing incentives, the easiest way to increase EV sales is to offer more affordable EVs. The reason is simple: Cars.com’s year-end buyer survey found that price was the biggest concern for both men and women. According to the car sales site, the initial cost is the top concern for 61 percent of men and 57 percent of women.
But by 2023, people may be able to buy cheaper electric cars in the United States for the following reasons:
- Intensified competition from established car companies
It’s safe to say that there are cheaper EVs on the market today. Chevrolet’s Bolt EV is back on the market after a massive battery recall, the Nissan Leaf has been on the market for years, and the Hyundai Kona Electric has been on sale since 2021, all of which start at around $30,000.
However, the Kona Electric and Nissan Leaf have smaller batteries and limited range. Therefore, Chevrolet’s Bolt EV is a more reliable choice for less than $30,000 and a range of 400 kilometers. However, as the backbone of the electric vehicle market, Tesla does not offer any products close to this price, so there are not many choices that meet consumers’ needs.
But this situation is changing. GM’s big electric car is due in 2023 when the brand will debut the Chevrolet Equinox EV, which starts at about $30,000. Along with the Bolt EV, GM will offer two crossover-style SUVs in the $30,000 price range.
The Chevrolet Blazer EV will go on sale later this summer, starting at around $45,000 without any incentives. GM’s electric pickup, the Silverado, will go into production next spring, though a cheaper version (starting at about $39,900) could arrive in the second half of 2023.
Toyota, a latecomer to electric vehicles, is still mired in developing an electrification strategy. After a delayed release last spring, the bZ4X finally made its U.S. debut. While numbers are currently limited, the model starts at around $43,000 and will be available in large numbers next year.
Speaking of delayed electric models, Nissan will also launch its popular Ariya CUV EV in early 2023. The Ariya is a joint design project between Nissan’s Japanese and European teams, featuring a sleek design and luxurious interior. The Ariya starts at around $43,190 in the entry-level Engage Trim.
Volkswagen’s ID.4 electric car, the world’s second-largest automaker behind Toyota, has been on sale in the U.S. since 2021 and has sold nearly 17,000 since. The ID.4 starts at $37,495. Volkswagen also plans to launch the ID.Buzz electric van in 2024.
- Fisker and Tesla
While traditional automakers are entering the game, start-up Fisker, led by Henrik Fisker, hopes to achieve even more ambitious goals in 2023.
The Fisker Ocean SUV EV is already in production at its plant in Graz, Austria. While the original Ocean One launch model will cost $69,000, the company will introduce other models next year, including the entry-level Ocean Sport, which starts at about $37,499.
- Will Tesla finally launch a low-priced model?
Tesla has always dominated the high-end luxury electric car market, and its cheapest model is the rear-wheel-drive Model 3, which sells for $46,990. Tesla CEO Elon Musk has said he will finally unveil the company’s sub-$30,000 self-driving taxi next year. But the model may not go into production for at least a year. - Impact of government subsidies
The U.S. Congress has introduced relevant legislation to help consumers buy electric vehicles at a more favorable price. While the Inflation Cut Act excise tax credit for electric vehicles currently applies to vehicles assembled in North America, certain upcoming changes will benefit two large automakers, Tesla and General Motors.
Under the old rules, Tesla and GM are gradually losing their eligibility for tax credits. But starting Jan. 1, 2023, the two automakers will be allowed to participate in the program again, and car buyers will get up to $7,500 in tax credits for qualifying electric vehicles.
That’s good news for both Tesla and GM. Tesla’s rear-wheel-drive Model 3 will have a full federal tax credit of $7,500 and will sell for less than $40,000. GM’s Bolt EV and upcoming Equinox will likely start well below $30,000. Both Tesla and GM can mass-produce these models, and GM will actually increase Bolt EV production next year.
Other vehicles will also benefit from the Inflation Cut Act, such as the Ford F-150 Lightning Pro and the upcoming Silverado EV, which will be the cheapest electric pickup on the market in 2023.
Additionally, the Inflation Cut Act allows commercial vehicles to also qualify for the full tax credit, regardless of where they are manufactured. The Ford F-150 Lightning Pro, Silverado EV, E-TRANSE electric van, and even Mercedes’ eSprinter Van and other electric models used for business purposes are eligible for the subsidy, which should help bring prices down even further.
At the end of the day, the era of cheaper EVs is upon us.
