This analysis finds that cost reductions in new electric vehicles (EVs) will lead to decreased used EV prices and cost parity with used gasoline vehicles for low-income households in the 2025-2030 time period.
Higher rates of depreciation for first owners of EVs will lead to larger benefits for lower-income second owners. By 2029, EVs will reach upfront price parity with the average vehicle purchased by a low-income household, less than two years after the average vehicle purchased by a high-income household. Currently, once accounting for fuel and other operating savings, some households in all income groups could save money by replacing at least one vehicle with an EV; this increases to 45% of households by 2025 and 95% of households by 2030.
Savings from EVs relative to income are significantly higher for low-income households, non-White households, and households in areas with higher levels of pollution. For car owners in the lowest-income quintile, savings from switching to EVs amount to $1,000 per household annually, or 7% of income, by 2030.
Even with widespread EV affordability, additional policy action would ensure equal access to EVs. Previous studies have shown that low-income EV buyers are more responsive to incentives, and that purchase incentives have become more important over time. Combustion vehicle phase-out regulations can force manufacturers to serve diverse markets, and broader access to financing for EVs will be critical for low-income households. In addition, policymakers will need to ensure targeted deployment of home and public charging deployment to support vulnerable communities and renters with less charging access.