Electric vehicle (EV) buyers are experiencing a notable shift in their purchasing dynamics, with lower average costs compared to luxury internal combustion engine (ICE) vehicle buyers, according to recent data from Experian and TransUnion.
While EV buyers have historically had similar credit profiles to luxury buyers, they are now paying less on average for their vehicles. The average credit score, interest rate, and risk profile of EV buyers align with those of luxury ICE vehicle buyers and have remained consistent over the past few quarters. However, the key difference lies in monthly payments.
In the first quarter of this year, EV buyers paid an average of $787 per month for a loan, while luxury ICE vehicle buyers paid $1,081 on average, representing a widening gap of approximately $100 compared to a year ago. This trend is attributed to the decreasing average prices of EVs and the availability of tax credits, which have made EVs more affordable for consumers.
According to TransUnion senior vice president Satyan Merchant, the initial wave of EV buyers consisted of early adopters who were willing to pay a premium for an EV. However, automakers are now lowering prices in an effort to stimulate a second wave of EV adoption, placing the decision to transition to EVs in the hands of consumers.
Average credit scores for EV buyers in the first quarter were 774, slightly higher than the 773 for luxury buyers, according to Experian. Both scores significantly exceed the average credit score of ICE vehicle buyers. Additionally, both EV and luxury buyers enjoy competitive interest rates, with EVs averaging about 6.7 percent compared to roughly 6.2 percent for luxury ICE vehicles.
Despite the lower monthly payments, EV buyers also benefit from competitive leasing options. The leasing tax credit, available since early last year, allows buyers to apply a $7,500 credit to a wider range of EV models if they lease, making leasing an attractive option. In the first quarter of 2024, EV buyers paid an average of $658 per month for a lease, while luxury ICE vehicle buyers paid $869 on average.
Looking ahead, EV leasing is expected to play a significant role in driving the used EV market. Merchant highlighted that both financing and lease deals are crucial in increasing EV consumption, which aligns with the goals of manufacturers seeking to expand EV adoption.
