Electric vehicle (EV) sales have skyrocketed in recent months. In the month of July, sales soared to a staggering 26.4% increase over the month of June. This boom amounts to just over 130,100 new EVs sold, marking the second-highest monthly sales number on record. The underlying trend is that consumers are ready and willing to jump on board electric vehicles. They are in a marathon to capitalize on existing tax incentives before they’re gone.
Compared to August 2022, EV sales are up almost 20%, a clear sign that the momentum in this part of the vehicle market is not slowing down. Tesla continues to be the one to beat with their aggressive sales releases leading the industry month after month. All other manufacturers are doing much, much better. Take the Chevrolet Equinox EV, which sold 8,500 units in July and thereby earned the title of top-selling model outside of Tesla for the month.
In July, the average transaction price for new EVs was $55,689. That figure was higher than the average transaction price of all new passenger vehicles, which came in at $48,078. The price gap shows the extent to which consumers are willing to pay for electric vehicles. Many buyers are still willingly paying more, buoyed by an average of $9,800 in financial incentives, which is about 17.5% of the average transaction price.
Legislation signed by President Donald Trump into law in July repeals tax breaks for electric vehicles starting Sept. 30. In order to qualify for the federal tax credit of up to $7,500 for new EVs or up to $4,000 for used EVs, consumers need to officially own an electric vehicle by that date. The soon-to-be-expired status of these credits has added to consumer urgency and purchase activity.
Realtor Stephanie Valdez Streaty explained how the impending deadline for tax incentives is influencing buyer behavior. We think that Q3 is going to be a record for EV sales. She continued, “The rush to purchase an EV before federal tax credits are reduced is palpable.” These fiscal benefits are key drivers of increased sales.
Additionally, Liz Najman noted, “We’re seeing significant volume in new EVs,” further confirming the robust demand for electric vehicles as consumers navigate their options ahead of the tax credit expiration.
The transportation sector is now the largest greenhouse gas emitter in the United States. Electric vehicles have recently been celebrated as “unambiguously better” for the environment compared to conventional internal combustion engine (ICE) cars. As more consumers opt for EVs, there is hope that this shift will have a positive impact on reducing emissions.
States and utilities can offer different financial incentives based on geographic location to spur on EV purchases. All this variability in incentives can help drive consumers to see electric vehicles as practical options that stand up against gasoline vehicles.