Like most emerging technologies, electric vehicles hit the market with high price tags, and were initially viewed as playthings for those who had $100,000+ to throw around on a car. But that's no longer the case, as drivers look to save on gas and take steps to address the climate crisis. Several EVs in the $30,000 to $40,000 range are already out there now, and more are coming.
Sure, they’re not as cheap as, say, a $15,580 gas-powered Nissan Versa, but prices are steadily coming down, making EV ownership more attainable and fun for the average car buyer.
Maintenance costs on battery-powered cars are also generally lower than their gas-powered counterparts because they have no engine (no oil changes) or transmission, and fewer parts overall. One study found EVs require 31% less maintenance, and when they do the bill is 22% less.
There are also state tax credit options available, plus the new federal $7,500 EV tax credit.
For now, here are the most noteworthy affordable EVs that are available now or hitting the market in the next year and what you need to know to cash in on tax credits. Starting prices shown.
How Do EV Tax Credits Work?
It's essential to check the state and federal tax credits available for your vehicle before purchasing, both of which can lower the price tag significantly.
State credits are relatively straightforward, such as New York's $2,000 rebate program. The Department of Energy maintains a list of incentives by state.
(Credit: Department of Energy)To find the rebates in your state, click on your state on the map above. Filter for EV fuel type and click on relevant rebate information. State credits can be combined with the $7,500 federal credit, which was passed as part of the Inflation Reduction Act in August; they're a bit more complex.
Federal EV Tax Credit Eligibility
A federal tax credit, passed as part of the 2022 Inflation Reduction Act, can shave off thousands of dollars from a vehicle's price tag. Buyers can claim credits for new and used vehicles when filing annual taxes with the IRS.
Here are the new vehicles that qualify for the full $7,500 credit or a $3,750 half credit. In order to qualify for any credit, vehicles must satisfy the following terms:
The car's final assembly must occur in North America. This rules out foreign automakers like Hyundai, which manufacture its vehicles overseas.
The credit will not apply to luxury vehicles. The EV must be $80,000 or less for vans, SUVs, and pickup trucks, and $55,000 or less for sedans.
The credit will not apply to wealthy households. You must make less than $150,000 for single filers, $225,000 for head of household, and $300,000 if filing jointly to be eligible.
After this, whether the vehicle receives a full or half credit depends on the percentage of battery materials sourced from North America. This is the strictest requirement, put in place as a response to foreign markets, particularly Asia, dominating the lithium and battery industry, which will be key to EV production in the coming years.
Vehicles will qualify for the first $3,750 portion of the full $7,500 credit if 40% of the minerals inside the battery, such as cobalt or lithium, are mined and processed in the US or via a free-trade partner (like Canada or Mexico).
The car receives the second $3,750 half of the credit if 50% of the battery itself is assembled in North America.
Finally, used cars are also eligible for a $4,000 credit or 30% of the sale price, whichever is lower, if they are more than two years old and less than $25,000.
