E-Vision Intelligence Report
September 2023

Are Mass Market Buyers Being Priced Out of EVs?  

Key Findings

• Premium EVs Far More Affordable than Mass Market EVs, on Relative Basis: The extra cost that premium automobile buyers are paying to own an electric vehicle (EV) vs. a comparable internal combustion engine (ICE) vehicle is significantly lower than that paid by mass market buyers. For example, in the compact SUV segment—the highest volume vehicle segment in America—the average five-year total cost of ownership of a premium EV is just $287 higher than a comparable ICE vehicle. Mass market EVs in that compact SUV segment cost $9,259 (18.0%) more than their ICE counterparts across five years of ownership.
• Ford Mustang Mach-E Nearly $3,000 More Expensive to Lease than Mercedes-Benz EQB: At the individual model level, this affordability gap between luxury and mass market EVs is most pronounced when comparing the Mercedes-Benz EQB with the Ford Mustang Mach-E. The total cost of a three-year lease for the EQB is not only lower than that of a comparable ICE vehicle in the luxury compact SUV segment, it is $2,899 lower than that of the Mach-E, which is a mass market vehicle. 
•  New Mass Market Entrants Coming in at High End of Price Curve: On average, new vehicles in the compact SUV segment are priced anywhere from $10,000-$20,000 higher than comparable ICE vehicles. One exception to this trend is the new Chevrolet Equinox EV, which is projected to be introduced toward the lower end of the price curve, putting it in line with comparable ICE compact SUVs.

Executive Summary

Automobile affordability is not linear. It’s a relative concept that needs to be evaluated in context by getting inside the mind of the consumer and weighing the complex mix of variables swirling around their brains when they’re considering a new vehicle. While a Bentley Bentayga may feel like a bargain at $200,000+ when cross-shopped with a $350,000 Rolls Royce Cullinan, the average Toyota Camry shopper might not be so quick to call either one of them affordable.

That same logic holds true in the EV market. Although many EV forecasts and analyses of relative affordability tended to lump all EVs into the same bucket when there were not that many models to compare, the rapidly growing markets for luxury and mass market EVs are shaping up to be incredibly different places with distinct consumer profiles. As those markets continue to grow, some stark differences are starting to emerge when it comes to relative affordability. Surprisingly, that dynamic is playing out in favor of the premium brand buyer where the affordability gap between EVs and comparable ICE vehicles is negligible. In the mass market segment, however, EVs come with a hefty premium over their ICE counterparts.

This E-Vision Intelligence Report dives into key data points trending in each monthly EV Index update, along with other data points gathered from J.D. Power studies and pulse surveys, to spotlight emerging trends and important shifts in EV consumer sentiment.

EV Tax on the Mainstream Buyer

EVs now account for 8.4% of the retail new-vehicle purchase and lease market, which represents considerable growth during the past few years, but before that market share can reach a meaningful tipping point, manufacturers will need to tap into the mass market segment. Currently, the lion’s share of EV sales (76%) is occurring in the luxury market. One big reason for that: relative affordability.

According to J.D. Power data that tracks five-year total cost of ownership in the compact SUV segment—again, the highest volume retail sales segment in the United States—the average premium brand buyer is paying just 0.4% more for an EV than a comparable ICE vehicle. By contrast, the average mass market brand buyer is paying 18.0% more to own an EV. 

Specifically, the average five-year total cost of ownership in the premium compact EV SUV segment is $71,707. That’s just $287 higher than the average for ICE vehicles in the same segment. By contrast, the average five-year total cost of ownership in the mass market compact EV SUV segment is $60,736. That’s $9,259 more than the average for comparable ICE vehicles.

Won’t You Buy Me a Mercedes-Benz?

Digging deeper into specific model-level comparisons, the gap between mass market and premium EV affordability becomes even more detached from conventional wisdom. For example, the most affordable EV relative to its comparable ICE models in the compact premium SUV segment is the Mercedes-Benz EQB, which has an average five-year cost of ownership of $72,107. If one were to buy a comparable ICE vehicle, it would cost $71,420 across the same period, a difference of $687. By contrast, the Ford Mustang Mach-E, which is the least affordable EV in the mass market compact SUV segment, has a five-year total cost of ownership of $67,719. The average five-year total cost of ownership in its ICE competitive set is $51,477, a difference of $16,242.

Leasing costs distort the traditional luxury/mass market relationship even further. Looking at the average total cost of ownership on a three-year lease for the Mercedes-Benz EQB vs. the Ford Mustang Mach-E in July, the EQB ends up being $2,899 cheaper overall than the Mustang Mach-E. In August, however, Ford started passing through the full federal tax credit of $7,500 to Mustang Mach-E lessees, which will bring three-year lease costs back down to just below the EQB.  

Equinox Might Buck the Trend 

The compact SUV segment is clearly a priority for manufacturers and there continues to be a great deal of new activity in the space, with several new models being introduced. On average, mass market EVs are priced around $16,000 more than comparable ICE vehicles. 

One notable exception to that trend is the Chevrolet Equinox EV, which is reported to be coming to market this fall with an estimated starting price of $40,000, followed by a base-trim offering in the spring at $30,000. This would put the Equinox squarely in the center of the cost curve for ICE vehicles in the compact SUV segment, potentially starting a movement towards parity in the mass market.

Methodology

This J.D. Power E-Vision Intelligence Report is based on data and insights from the J.D. Power EV Index and the J.D. Power EV Retail Share Forecast. The J.D. Power EV Index is an analytics tool to benchmark the growing EV market in the United States. It tracks millions of data points aggregated into six categories—interest, availability, adoption, affordability, infrastructure and experience—to evaluate the progress to parity of EVs with ICE vehicles in the U.S. Each month, the J.D. Power electric vehicle practice will analyze these data points, and others to spotlight emerging trends and important shifts in consumer sentiment that are helping to define the fast-moving EV marketplace. 

Find out More

This report was authored by Elizabeth Krear, vice president, electric vehicle practice; Brent Gruber, executive director, electric vehicle practice; Stewart Stropp, executive director, electric vehicle practice; and Kristen Richter, senior manager, electric vehicle practice. The J.D. Power E-Vision initiative is a company-wide program focused on maximizing J.D. Power industry-leading EV data, analytics, insights and solutions. Please contact us at the numbers below to connect with the authors or to learn more about the underlying research.