The Growth of New Car Prices in the U.S.

New car prices have soared in recent years.

As a result, those looking for a cheap new car have very few options in today’s market. While average transaction prices for new cars declined 1.4% year-over-year as of October, they have increased to an average price of $47,936—roughly a 60% increase over the last decade.

This graphic shows the steep rise in new car costs, with data from Cox Automotive.
 

New Vehicle Price Growth

A host of factors can explain the jump in new car prices.

These include more standard features (which drives up the base cost of a vehicle), as well as shifting consumer preferences towards pricier crossovers & SUVs.

Supply chain issues during the COVID-19 pandemic also sent prices skyrocketing, though they’ve come down slightly throughout 2023.

While the average transaction price of a Tesla falls around $53,000, there are options from other car makers that are more affordable. Here are new cars with a starting price below $20,000:

The above low cost vehicles are all from legacy car makers. These companies have the advantage of accessing large amounts of capital, manufacturing skills, and powerful brands.

Still, as the industry evolves, the new companies driving electric vehicle production could reshape the industry, presenting challenges for legacy companies.

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