This summer, something wild happened: EVs in the U.S. dipped below the price of gas cars. For years, battery costs and luxury positioning kept EVs out of reach for the average buyer. But thanks to hefty tax credits and big manufacturer incentives, the tables finally turned at least for a couple of months. It’s the kind of shift that shows how fast the EV market can change when price becomes less of a barrier.
In August, the average EV sold for $44,908, while gas cars averaged $45,521, according to J.D. Power data. That’s about $600 cheaper. Compare that to early 2023, when EVs cost over $16,000 more on average, and you can see why analysts are calling this a turning point. As Tyson Jominy, senior VP of data and analytics at J.D. Power, put it:
“It is fairly recent and rare that we’re actually seeing EV transaction prices fall below ICE.”
The deals were no accident. Automakers stacked cash on the hood to move inventory before tax credits expired. Add in federal incentives, and buyers scored some serious bargains. Incentives hit record highs at nearly $7,500 per EV in August, compared to $2,500 for gas cars. The average savings from federal tax credits jumped to $5,124 in 2024, up from $4,302 the year before. Leasing became the go-to move, since all EV leases qualified for the full $7,500 credit. By July, leases made up 70% of EV transactions. For buyers who never thought they’d see EVs priced below gas models, this was a rare window.
But don’t expect this price gap to stick. With the EV tax credit sunsetting and political winds shifting, automakers are already signaling supply cuts and fewer discounts. J.D. Power expects EVs to climb back above gas vehicle prices as early as next year. Still, the short-term surge is undeniable: EVs made up 9.9% of U.S. sales in August, the highest ever, according to Cox Automotive. That echoes what happened in Norway and China when EVs undercut gas vehicles. Norway used incentives to push EVs to nearly 90% market share, while China saw annual sales jump eightfold between 2018 and 2024 as costs fell. The U.S., though, still lags with only two models under $30,000 compared to 50 gas-powered options.
Affordability is the missing link for mainstream adoption. Surveys show that cost, more than charging or range anxiety, is the biggest reason Americans hesitate on EVs. As long as large trucks and SUVs dominate the market, battery packs will need to be bigger, and that drives prices higher. Still, as battery tech improves and more budget-friendly models hit showrooms, parity with gas cars will come back for good.
Even if this summer proves to be a blip, the long game looks strong. Battery prices continue to fall, charging infrastructure keeps expanding, and every major automaker has long-term EV commitments they can’t just abandon. More affordable EVs like the new Nissan Leaf and upcoming electric trucks are entering the market, and when supply finally catches up with demand, the price gap will close naturally. As Jominy summed it up:
“In the short term, EVs will probably, at best, go sideways. But over the long term, we are still optimistic about EVs. We do not believe that this is the end.”
For now, EV shoppers in the U.S. are in a rare sweet spot. Lower prices, fat incentives, and the chance to get behind the wheel of something faster, cleaner, and future-proof. But once the credits expire and discounts disappear, the scales will tip back. If you’ve been waiting for the right time to switch, this might be the best deal window you’ll see for years.
Source: InsideEVs