Electric automakers continuously offer significant discounts to attract more customers to buy their products over any other models from different brands in the highly competitive market.
These initiatives aid customers to afford expensive electric vehicles, especially luxury models. In effect, these price cuts and discounts revive the demand for all-electric vehicles over hybrids.
“The adoption curve for hybrids is much further along.”
Pat Ryan, Digital car marketplace CoPilot CEO
Discounts
The intensifying competition brought on by transitioning legacy automakers and electric startups prompted Tesla to launch major price cuts across its models.
According to CNN Business, the Tesla Model 3’s base sticker price fell 17% year-on-year. The Musk-led company’s price cuts triggered a price war in the industry, pushing rivals to lower their pricing.
The report indicated that US EV sales, excluding Teslas, averaged around $1,500 over sticker price in September 2022. Interestingly, Edmunds’ data revealed that it dropped to approximately $2,000 below sticker price after a year.
In September 2023, the average price of a new car sold was approximately $900 less than its listed sticker price.
As for non-Tesla models, they also offer major discounts. Audi’s E-Tron GT has an average sticker price of about $119,000 (including options). It offers a $7,200+ customer discount.
The Volvo XC40 Recharge, with about $61,000 average sticker price, also has a discount of around $7,750. According to Yoon, these offered discounts exclude government tax credits.
For context, government tax credits disqualify most EV models due to stringent restrictions. The US currently offers up to $7,500 tax credits for eligible models under the Inflation Reduction Act.
Moreover, incentives for electric vehicle models reached 9.8% of their average transaction price (ATP) to $4,991 in September, Insider reports, citing Kelley Blue Book.
Leasing
Strict standards drop if customers opt to lease the EV instead of outright purchase, the report indicated, citing Tax Institute at H&R Block’s Alison Flores. It apparently includes vehicle price limits.
As EV-a2z reported, eligible customers can pass their tax credits to their chosen leasing firm in exchange for lower lease payments.
It is also worth noting that more expensive EVs generally have the highest discounts. Nonetheless, non-luxury models also provide significant discounts, such as Volkswagen ID.4’s approximately $2,900 markdown. The Nissan Ariya also offers a discount of around $2,200.
Affordability has been one of the major barriers to the widespread adoption of electric vehicles. That said, these major discounts and government incentives essentially make these expensive models more affordable. In effect, EV sales increase as customers take advantage of the currently available price cuts and tax credits.
