Electric Cars Now Cost Just $4,700 More Than Gas Models

For the first time, electric cars are within striking distance of costing the same as gas-powered vehicles, marking a turning point for American drivers considering the switch.

New electric vehicle buyers paid an average of $54,813 in August 2024, according to Kelley Blue Book. That's down 2.7% from last year, even as regular car prices jumped nearly 2% to top $50,000 for the first time this year.

The price premium for going electric has shrunk to just 9.4%, down from over 16% a year ago. In real dollars, that means EVs now cost about $4,700 more than the average new car, the smallest gap on record.

What's driving the change? Electric car prices are falling while everything else gets more expensive. EV makers are competing harder for buyers, and manufacturing costs continue to drop as battery technology improves and production scales up.

Tesla played a big role in pulling down average EV prices. The company's vehicles sold for an average of $52,616 in August, down 3.4% from the previous year. Because Tesla still dominates US electric car sales, its pricing moves the entire market.

Interestingly, EV prices dropped even as automakers reduced discounts slightly. Incentive spending fell from 14.6% of purchase price last year to 12% in August. Still, electric cars receive nearly twice the discounts of gas vehicles, which average just 6.5%.

The Bright Side

This narrowing price gap matters because cost has been the biggest barrier keeping Americans from going electric. As EVs approach price parity with gas cars, millions more families can afford to make the switch without stretching their budgets.

The timing couldn't be better for household finances. With gas car prices climbing above $50,000 and showing no signs of slowing down, EVs are becoming the more affordable option when you factor in lower fuel and maintenance costs over time.

For drivers who've been waiting on the sidelines, watching and wondering when electric would make financial sense, that moment is arriving faster than expected.