Electric vehicle discounts drive U.S. sales boom to record third quarter, but can it do it?

The average incentive rate for new electric vehicles in the U.S. last quarter was 12% of the average transaction price

U.S. electric vehicle sales rebounded strongly in the third quarter, soaring 11% year-on-year, accounting for 8.9% of the total new car market, a record high. This strong rebound suggests that while overall EV growth momentum has faltered for much of 2024, interest in the sector is far from waning.

While global and even U.S. electric vehicle sales have been slowing for much of the year, Kelley Blue Book data shows an estimated 346,309 battery-powered models were sold in the third quarter of 2024. That was up 5% from the second quarter, driven in large part by aggressive incentives and deep discounts. On top of that, a plethora of new, more affordable and increasingly compelling EV options help keep the market humming.

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In September, the average incentive rate for new electric vehicles in the United States was 12% of the average transaction price (ATP), significantly higher than the industry-wide rate of 7.3%. Incentives peaked at 13.32% and 11.54% of ATP in August and July respectively. These numbers are significantly higher compared to earlier this year, when incentives for months such as January, February, April, and June hovered between 9.11% and 9.22% of ATP.

Kelley Blue Book also noted that the “lease loophole,” which allows automakers to offer most, if not all, non-North American-made electric vehicles and take advantage of the $7,500 federal EV tax when leasing them, was widely exploited throughout the quarter. credit. The average price of an electric vehicle in the third quarter was just over $57,000, 19% higher than the industry average.

General Motors’ electric vehicle sales surged nearly 60% in the third quarter to 32,095 units, enough to secure second place behind Tesla (166,923 units) as the largest seller of electric vehicles in the United States. Hyundai Motor Group’s sales were flat at 29,609 units, falling from second to third place, while Ford Motor Group ranked fourth with 23,509 electric vehicle sales.

According to reports, Tesla sales also increased by 6.6% over last year due to the arrival of the Cybertruck. The Model Y remains the most popular electric vehicle in the United States, with 86,801 units sold in the third quarter, well ahead of the Model 3’s 58,423 units and the Cybertruck’s 16,692 units.

“While year-over-year growth has slowed, U.S. electric vehicle sales continue to move higher,” said Stephanie Valdez Streaty, director of automotive industry insights at Cox. “Part of the growth is due to incentives and discounts; but as more affordable electric vehicles enter the market and infrastructure improvements, we expect more adoption in the coming years.”

Still, the looming question is whether this momentum can be sustained without overreliance on discounts and incentives. While automakers are currently putting their foot down, it’s unclear how long they can afford to subsidize sales – especially as the industry faces rising production costs and increased competition from new entrants.

U.S. electric vehicle sales by brand