EV prices dropped again in February, nearing parity with ICE vehicles

EV prices dropped 12.8% YoY in February—the latest sign that plug-in cars could soon reach price parity with combustion engine vehicles.

That’s according to new data from Kelley Blue Book, which reported that the average price of an EV last month was $52,314, down from $54,863 in January and only about $5,000 more than the average transaction price for a new vehicle in the US in February ($47,244).

“Our research continues to show that price remains a significant barrier for consumer adoption,” Stephanie Valdez Streaty, director of industry insights at Cox Automotive, which owns KBB, said in a statement. “While the higher inventory levels and increased competition continue to drive down the price premium of EVs, it’s important to acknowledge that EVs remain priced above mainstream non-luxury vehicles by nearly 19%.”

Recent price declines in the EV segment have been driven in large part by aggressive price cuts by Tesla for the two most popular EVs in the country: the Model Y and Model 3.

KBB’s analysis found that transaction prices for the Model Y fell 16.2% YoY, hitting their lowest level on record in February, while Model 3 prices were down 12% YoY. Cox Automotive noted that “high incentives and discounts on most models also continue to play a major role in lower EV prices.”

Automakers have made a number of recent moves to lower the price tags of their electric models. American Honda recently announced that two of its EVs—the Acura ZDX and the Honda Prologue—are now eligible for a $7,500 consumer tax credit for EV purchases that meet certain requirements. Automakers including Ford, Rivian, and General Motors have slashed prices on their EVs amid flagging demand.

Analysts at Goldman Sachs said in a February research note that falling battery prices, a significant contributor to the overall cost of plug-in cars, are likely to help juice EV demand in the years to come.

Expect EVs to get cheaper in the immediate future, especially as US automakers try to compete with Chinese EV makers like BYD, which offers some models for less than $10,000. For example, Bloomberg reported this week that Ford is delaying plans to debut a larger electric SUV to develop “smaller, low-cost” vehicles aimed at competing with Chinese EVs.