Ahead of a midterm election cycle where the price of gas was a major concern in exit polls, the Eno Center for Transportation hosted a conversation focused on automotive affordability as a part of the Transportation Affordability Webinar Series. The webinar featured panelists Corey Cantor from the Zero Emission Transportation Association, Abbie Olson from Atlas Public Policy, Zohaib Rahim from Cox Automotive, and Matthew Vining from Atlas Public Policy.

Consumers are facing increasing gas prices because of the War in Iran, but automotive affordability extends beyond the pump and is a combined package of vehicle affordability, maintenance costs, insurance costs, and of course fueling costs. During the webinar, the panelists discussed how increasing average vehicle costs and gas prices have impacted consumers. They also discussed how the US market and policymakers can promote more affordable and fuel-efficient vehicle options and discussed the intersection of international competitiveness and vehicle affordability.

What is the State of Automotive Affordability?

Rahim began the conversation providing perspective on the overall economic outlook for automotive consumers. Automotive affordability is not just determined by vehicle sticker prices but also the state of household budgets. Personal expenses have grown faster than personal incomes. Last quarter, the economy grew at a 3.4% annualized rate, the fastest in 2026, and new vehicle sales are on pace to hit 16 million this year. However, Rahim attributed this to wealthier households and highlighted negative consumer health based on consumer sentiment and the labor market. Growth in car sales is being driven by the wealthiest consumers including older households, with buyers 65 and older making up 27% of new vehicle purchases.

For most consumers, higher gas prices are placing increased pressure on consumers, and tax rebates from earlier in the year are no longer giving households an extra boost. To adapt to these pressures, consumers are choosing to purchase older vehicle models or hold onto to their vehicles for longer. While these decisions have enabled households with tighter budgets to remain in the market, they may produce higher costs later with higher repair bills or longer loans.

Cantor described overall trends in vehicle costs and changes to the electric vehicle market. According to Edmonds, new car prices have increased by 46% from 2015 to 2025, with Kelly Blue Book finding that average new vehicles are now $50,000. While research from IEA indicates that electric vehicles are still more expensive than their comparable vehicle types, the top five selling EVs are under $50,000. Corey attributed the overall price increases in vehicles not only to the introduction of more electric and hybrid options but also to the increase in vehicle size. In 2008, sales of new sedans were 50% of the market; that figure has declined to only 17% last year. In contrast, SUVs went from 25% to 60% of sales in this period. Over this period, pickups remained around 20% of sales.

Since 2020, US EVs sales have accelerated from 300,000 to 1.6 million in 2024. With the expiration of the EV tax credit in 2025, there was a decline in electric vehicle sales, so the industry is in a transitional phase as it works to provide more affordable vehicles. In South America and Southeast Asia there has been notable growth in electric vehicle sales with the increase in fossil fuel prices.

Used Electric Vehicle Market as a Pathway to Affordability

Olson and Vining opened the webinar by providing an overview of their research on the used electric vehicle market. They emphasized that a significant percentage of households are purchasing vehicles off the used market—regardless of drivetrain—and that the used market is 2.5 times the size of the new vehicle market, making it a critical point for vehicle affordability. From 2022 to 2025 the average price for used vehicles has dropped to around $25,000 for both EVs and internal combustion vehicles, with the average used EV price around 36K in 2025. Vining found that in Colorado from 2020-2024 the used EV market sales share grew four times. The median price point for these sales was just under 30K, and the sales were concentrated amongst early models and certain counties. It takes around 7 years or 90,000 miles for EVs to depreciate to deeper affordability around $20,000.

Olson also found 4X growth in used EV sales from 2019-2025 in Tennessee. She found that 60% of EV borrows had incomes over $100,000 in comparison to 37% of gas vehicle borrowers. Olson and Vining emphasized that while used EVs provide a more affordable option than a new vehicle, making them accessible to lower income groups may require a policy intervention providing access to upfront capital.

Vining and Olson highlighted that as the EV market continues to mature, the number of electric vehicles on the used market will also continue to grow. Vining highlighted that last quarter a high of 127,000 used EVs were sold on the used market. Olson emphasized that the battery capacity of two to three-year old electric vehicle batteries have around 90% of their capacity and most electric vehicles have an eight year or up to 80,000-mile warranties that transfer with ownership. Vining and Olson highlighted additional findings that across comparable vehicle types over seven years, the electric option can save consumers $10,000 in Colorado, $8,0000 in California, and $10,000 in Washington.

International Conflict Impacting Fuel Affordability and Consumer Decisions

When asked about international tensions are impacting the affordability of driving, Rahim shared that since the start of the conflict in Iran, the national average for regular gas prices has moved from $2.94 a gallon to $4.27, a 45% increase, and peaked at $4.50 in May. This was also the first October since 1990 with gas prices above $4. For the average household, energy prices are also $1,000 higher than before the conflict and overall prices rose 0.5% last quarter, adding to budgetary pressure. Diesel prices are about two thirds higher than before the war, making the cost of shipping goods, including vehicles, higher. Rahim shared that compact vehicle, EV, and hybrid sales have increased, indicating that consumers may be looking for better fuel efficiency.

Cantor added that in previous high fuel price periods such as during Russia’s invasion of Ukraine, interest in cleaner vehicles has grown, but drivers first instinct is to hold their vehicles before potentially purchasing a new vehicle. Given that average prices are $50,000 for new vehicles and used vehicle prices also become elevated in a high-cost environment, those purchasing EVs or hybrids were likely already considering the purchase of a new vehicle but as fueling prices remain high people will likely continue to pursue affordable EVs and hybrids. He highlighted movement within the EV markets towards models closer to the $32,000 and $40,000 price range and that Toyota, which has been an affordable option for many households, is making many of their base-trims hybrids. He did emphasize that households also consider brand value, size, and family needs in addition to sticker price when purchasing vehicles.

Vehicle Affordability and International Competition

Rahim shared that globally affordable electric vehicle and hybrid options have been key drivers of growth within respective new vehicle markets. From the consumer perspective, has been demand for affordable vehicle options from Asian brands, and international brands selling affordable vehicles in the US markets has been important for consumers. For companies, the ability to service affordable vehicles in different regional markets will be crucial. Cantor shared that even if Chinese vehicles continue to be banned from US markets, US companies will still be competing with Chinese, Japanese, and Korean manufacturers in the international market. He emphasized the importance of bringing down costs in order to both deliver consumer affordability and better compete.

Cantor highlighted the importance of battery prices in making EVs affordability, as batteries drive 30 to 50% of the value of an electric vehicle. He cited a decrease from $1,400 to $108 per kWh from 2010 to 2025. He emphasized that there is still room for battery costs to come down, potentially further unlocking more affordable EV options. Vining seconded Cantor’s views that a continued reduction in the costs of batteries will make EVs are more viable option for a wider more of consumers. Vining also emphasized the importance of onshoring more of the battery supply chain to reduce import costs. Even with the removal of the 30D tax credit and setbacks in the EV market, there has been continued interest at the federal level and in the private sector on batteries, including access to critical minerals and scaling battery production. Battery chemistry and production improvements present opportunities for cost reductions. According to Cantor, on the internal combustion side, these types of cost improvements have already been made, so future cost efficiencies for internal combustion vehicles will more likely be found through a shift back to sedans.

Policy Changes and Affordability

The panelists also discussed how federal policy actions can impact vehicle affordability. Rahim said that the reduction in fuel efficiency standards through the CAFE program will have minor cost savings for consumers in the short term and highlighted that automakers will continue to plan for future product cycles with more fuel-efficient vehicles. Reducing fuel economy standards also presents a longer-term trade off to drivers, as a potentially cheaper but less fuel-efficient vehicle will be more costly from a fueling perspective. Fuel economy can also affect resale values, with higher miles per gallon vehicles outperforming the overall market. Cantor highlighted a cost benefit analysis showing that the increase in fuel prices will far outweigh savings from having less stringent fuel economy standards in place. Cantor also fluctuating fuel economy standards can have negative ramifications on US performance in the international market due to the cost of policy instability and concern about the US falling behind international fuel economy trends. Cantor emphasized the importance of automakers have a robust electric vehicle portfolio both for international competition and meeting future CAFE standards.

In terms of surface transportation reauthorization, Olson recommended that EV fees which are included in BUILD America 250 are capped or indexed to the gas tax to ensure that they are comparable to want gas drivers are paying in fuel taxes. She also suggested allowing installments to promote affordability and raised concerns that a registration fee will disproportionately impact lower income households that tend to drive less on average. Vining said there is agreement that the existing funding structure for the Highway Trust Fund is not fair nor sufficient and encouraged further exploration of fees based upon vehicles miles traveled.

At the state level, Cantor, Vining, and Olson highlighted several state level incentive programs including in California, Colorado, Delaware, Oregon, Rhode Island, New Jersey, and Maryland providing tax credits for vehicle purchases. These programs can particularly support affordability when offered at the point of purchase rather than waiting for a tax rebate. Cantor also highlighted programs in Massachusetts and Colorado to help rideshare drivers access EVs. Going into a new Congress, these state level programs can provide lawmakers with key insights into increasing affordable options for drivers on the margins of new or used vehicle purchases.