The Tesla Model Y SUV topped electric car sales last year with nearly 400,000 units sold.
The Washington Post via Getty Images
The good news for automakers and environmentalists hoping for a zero-emissions vehicular future is that electric vehicles accounted for 7.6% of the new-car market in 2023, according to Kelley Blue Book, which represents nearly 1,200,000 units. That’s up from 5.8% in 2022 and just 3.2% in 2021. What’s more, by year’s end the average transaction price for a new EV fell to $50,789, which represents a 17% drop over the previous 12 months and places them within striking distance of internal-combustion models.
Tesla not only led the pack with regard to new EV sales last year, but price cuts as well, slashing MSRPs on select models from $6,000 to $20,000. Not coincidentally, Tesla sales spiked by nearly 20% in the fourth quarter of 2023, accounting for just over 1.8 million vehicles delivered to customers on the year, which is up by 37.7% over 2022. As a result, the company accounted for around 55% of all new EVs sold in the U.S.
The bad news is that a combination of forces, specifically ongoing issues with public charging and real-world operating range, along with several models losing eligibility for the one-time federal tax credit granted to qualifying EV buyers is expected to flatten the segment’s upward curve a bit moving forward.
As it was only a relative handful of models last year were sold subject to the one-time $7,500 tax credit enabled by 2022’s Inflation Reduction Act, with fewer purchasers qualifying for them because of transaction price and income limitations included with the bill. With eligibility tightening further this year with regard to vehicle and battery sourcing, only a half dozen EVs from the 2022-2024 model years still qualify for the credit. On the plus side, buyers can now claim the credit at the point of purchase as a cash rebate rather than having to wait until the following year to claim it on their tax returns.
According to the EPA, models still good for the full $7,500 include the Chevrolet Bolt EV and EUV (discontinued for 2024), the Ford F-150 Lightning Extended and Standard Range trucks and select versions of the Tesla Model 3, Model X and Model Y; credits for the Rivian R1S SUV and R1T pickup fell to $3,750. Models dropped from the list this year include the Cadillac Lyriq, Nissan Leaf, Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive50e and the Audi Q5 PHEV 55.
Automakers incentives, especially on EVs which were not eligible for the federal tax credit beginning last year, were ramped up to help move the metal, with cash rebates topping out at $10,000 to a whopping $30,000 on versions of the pricey Audi e-tron GT. The Ford Mustang Mach-E and Subaru Solterra EVs are being offered with 0.0% financing. Plus, a number of automakers have been exploiting a loophole in the legislation that allows them to pass along the full $7,500 credit – even on models that otherwise would not qualify for them – via their leasing programs.
As a result, Cox Automotive predicts leasing of electric vehicles will increase from approximately 20% to 25% over the coming year.
In the meantime, these are the 10 top sellers among new electric vehicles during 2023 according to KBB:
Tesla Model Y: 394,497 units
Tesla Model 3: 220,910 units
Chevrolet Bolt EV/Bolt EUV: 62,045 units
Ford Mustang Mach-E: 40,771 units
Volkswagen ID.4: 37,789 units
Hyundai Ioniq 5: 33,918 units
Rivian R1S: 24,783 units
Ford F-150 Lightning: 24,165 units
Tesla Model X: 23,015 units
BMW i4: 22,583 units
As it stands, Tesla is every bit as strong a brand in the used electric vehicle market as it is among new models. According to the vehicle marketplace iSeeCars.com, the Tesla Model 3 leads the pre-owned market with 34.9% of all recorded sales. Unfortunately, EVs are notorious for losing their resale values precipitously as each successive generation of new and improved models reaches showrooms, with the recent round of new-model price cuts only exacerbating the problem.
Used EV prices were down 33.7% in the fourth quarter of 2023, according to iSeeCars.com data, which comes to an average $34,994 compared to $52,821 in 2022. Pre-owned EVs with the steepest price drops tend to be older models with what many consider to contain dated technology, including the Nissan Leaf, Chevrolet Bolt EV and the Tesla Model 3, Model X and Model S.
Expect used EV prices to take a further hit this year as Hertz announced they will be selling off a third of its full-electric fleet – nearly 20,000 units – with around 80% of them being Teslas. The rental company says they will be replacing them with conventionally fueled cars and SUVs that are more popular among consumers, cost less to repair and will more steadfastly hold onto their residual values.
On the plus side, a new incentive for used EV buyers debuted last year in the form of a tax credit of up to $4,000 or 30 percent of a vehicle’s sale price of the vehicle, whichever is lower. To qualify, the vehicle must have had only a single owner, and it must be purchased from a dealership; assembly or parts sourcing do not apply here. There are also income limits for the used-EV credit, however, and they’re $150,000 for joint filers, $112,500 for a head of household, and $75,000 for an individual.
At that, these are the used EVs iSeeCars.com says were the top sellers in the U.S. last year, with the market percentage of one-to-five-year-old models noted:
Tesla Model 3: 34.9%
Tesla Model Y: 11.9%
Chevrolet Bolt EV: 6.9%
Nissan Leaf: 6.2%
Tesla Model S: 5.6%
Tesla Model X: 5.5%
Ford Mustang Mach-E: 4.6%
Audi e-tron: 2.9%
Porsche Taycan: 2.4%
Volkswagen ID.4: 2.2%