According to Kelley Blue Book (KBB) estimates, the average price paid for a new electric vehicle (EV) in the US rose by $313, or 0.5%, in March 2023 compared to February 2023. The average new EV sold for $58,940 in March, well above the industry average. Despite Tesla, the automaker with the largest share of EV sales, cutting prices three times in recent months, the increase was driven by rising sales from other brands, such as Mercedes, Rivian, and Lucid, offsetting lower-priced Tesla products.
Although new EV pricing peaked in 2022, March’s upward movement of the average transaction price (ATP) was unexpected, said KBB. Nonetheless, sales volumes rose by 20% month-over-month and 8% year-over-year in March 2023, partly thanks to improved supply, a better mix of lower-priced models, and strong fleet sales.
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In contrast, March 2023 marked the end of nearly two years when the average price paid for a new vehicle in the US fell below the manufacturer’s suggested retail price (MSRP) for the first time in 20 months. In March 2022, the average ATP was almost $1,000 over MSRP. However, the ATP of a new vehicle in the US declined in March 2023 to $48,008, a month-over-month decrease of 1.1% ($550) from a downwardly revised February reading of $48,558.
Most non-luxury brands, including Chevrolet, Chrysler, Dodge, Ford, Hyundai, Kia, Nissan, and Volkswagen, saw ATP declines between 0.2% to 3.8% month-over-month in March, correlating with higher incentives pushing prices down. Honda and Kia showed the most price strength in the non-luxury market, transacting between 3% and 6% over sticker price in March.
Strong luxury vehicle sales have been the primary reason for overall elevated new-vehicle prices, and this trend continued in March 2023 when luxury vehicle share hit 18.2% of total sales, slightly down from a high of 19.3% in January 2023. Two luxury brands now have average transaction prices over $100,000: Land Rover and Porsche.
Although luxury vehicle ATPs were a mixed bag in March, with entry-level luxury cars, high-end luxury cars, luxury compact SUVs, luxury mid-size SUVs, and luxury subcompact SUVs all showing price declines between 0.5% and 1.4%, luxury cars and luxury full-size SUVs saw price increases between 0.8% and 1.6%. Buyers continue to pay over MSRP for new luxury vehicles, with the average luxury buyer paying $65,202 for a new vehicle in March 2023, down just $9 from February 2023.
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Overall, the EV market is becoming more competitive, with more brands entering the market, driving up the average transaction price. As a result, car manufacturers are offering higher incentives to push prices down in the non-luxury market. The luxury market remains strong, with buyers willing to pay over MSRP for new luxury vehicles, keeping prices high despite some fluctuations in ATPs.
