71% of Consumers Not Likely to Spend Over $25,000 on Next New Vehicle Purchase

4 years ago by Eric Loveday 24

I'm Only $25,000

I’m Less Than $25,000

Apparently, there’s a price point at which the majority of new vehicle buyers get turned off: $25,000.

That’s the latest word from Navigant Research.

The firm recently conducted a survey of 1,084 consumers.  The findings show that 71% of those surveyed hope to spend $25,000 or less on their next new vehicle purchase.  43% of the respondents stated that their price threshold was only $20,000.  These responses are not specific to plug-in vehicles.  The survey solely asked price questions, with no connection to vehicle type.

If we remove the federal tax credit from the equation (most buyers shopping in the $20,000 to $25,000 price range likely don’t qualify for the entire $7,500 tax credit, so we’re excluding that here), then which plug-in vehicles can be purchased in the US for $25,000 or less?

If you go solely by MSRP, only one comes to mind: Smart Fortwo Electric Drive.

Price Comparison Graph Courtesy of kdawg

Price Comparison Graph Courtesy of kdawg – Click to Enlarge

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24 responses to "71% of Consumers Not Likely to Spend Over $25,000 on Next New Vehicle Purchase"

  1. kdawg says:

    Other than truecar.com, which only shows individual vehicles, does anyone have any charts showing the distribution curve for new vehicle transactions? I know the average price of a new car is over $31k, but that’s not telling us much.

    1. Jay Cole says:

      That kind of data would be nice. Although, given the 98.7% of plug-ins are cars, the average passenger car transaction price is around $26,000.

      Random info (below): Cars with monthly sales over 20k last month

      Toyota Camry $22,235 (29,144 units)
      Honda Civic $17,965 (27,328)
      Honda Accord $21,995 (25,162)
      Toyota Corolla $16,800 (23,637)
      Nissan Altima $22,010 (21,785)
      Ford Fusion $21,900 (21,740)

      1. kdawg says:

        Thanks. Maybe this will be my next project.

  2. Mark H says:

    First of all, what we need more than a proposed $10,000 credit is a $7500 credit available at time of purchase.

    Secondly, what is it going to take for people to understand the savings in refueling????????
    I am all for saving money, but you just can’t put a $25,000 cap when the savings goes long beyond this. A person spending $50/week on gas = $200/month = $2400/year = $20,000 in fuel cost of the 8 year battery warranty period of a good EV warranty. Depending on your cost of electricity (solar being the cheapest), you could be knocking $12,000-$16,000 off the money oozing from your pocket book. Now $25,000 smells like $10,000. Seriously, how long is this going to take to sink in??????????????????????????????????????
    And we haven’t even discussed the service savings.
    http://insideevs.com/power-your-car-for-160year-every-year-for-25-years-with-diy-solar/
    http://insideevs.com/ev-vs-ice-maintenance-the-first-100000-miles/

    1. kdawg says:

      That’s a good question. I don’t know what it will take for people to realize they don’t have to spend $150/month for gasoline. This is money in their pockets, but they won’t do the math or just ignore it. It’s almost as if $ for gasoline is as inevitable to them as death & taxes. Tesla’s free superchargers seems to make an impact. People like the word “free”. Not sure how this could be conveyed to other plug-ins. Maybe car companies could offer “free fuel for 3 years”, then give them 3 years * 12,000 miles/year * 0.25 kWh/mile * 12cents/kWh = ~$1000 off. I think the bold print “FREE FUEL FOR 3 YEARS”, would catch some eyes, or at least inspire them to start thinking about the math.

    2. sven says:

      No fuel savings for me. I pay $.22/kWh, but would still get another EV for my next car. My neighbors on the other hand would be more inclined to purchase a 50 mpg hybrid like the 2014 Accord Hybrid, since the gas refueling costs for this car would cost the same as the electricity costs for charging an EV.

      http://www.bls.gov/ro2/avgengny.pdf

      1. kdawg says:

        Looks like most would still save $ using electricity. (Assuming 12K miles/year, $3.50/gal avg price and $0.22/kWh avg price, 4 miles per kWh)

        Gas
        12000/50mpg*$3.50 = $840/year

        Electricity
        12000 miles * 0.25 kWh/mile * $0.22/kWh = $660/year

        1. sven says:

          Why are you using a .25 kWh/mile figure? I based my calculations on the Leaf’s $.29 kWh/mile figure (Fit EV = .29 kWh/mile, Spark EV = .28 kWh/mile, Volt = .35kWh/mile, Tesla Model S 85 = .38 kWh/mile). But in fairness, gas went up $.15/gallon in the last couple of weeks and is currently $3.65/gallon.

          Gas
          12000 miles/50mpg * $3.65 = $876/year

          Electricity
          12000 miles * 0.29 kWh/mile * $0.22/kWh = $765/year

          Electric is still cheaper but it’s close, a $111/ year difference. The next gen Prius due to be released in the 2015 MY is expected to get a 60mpg rating for a annual gas cost of only $730 at $3.65/gallon. But many people won’t consider buying the next gen Prius unless they improve the aesthetics and driving dynamics.

          Gas (estimate) – 2015 Prius @ 60mpg
          12000 miles/60mpg * $3.65 = $730.

          1. kdawg says:

            I was using it based on personal experience in my Volt. When it’s not freezing out, I get 4 miles per kWh (and I’m in Michigan). Most Volt drivers I’ve corresponded with, in the more temperate climates, easily get over 40 miles/charge year round.

            However I forgot about the efficiency loss of the charger. (~85%). So it would be more like 0.29 kWh/mile.

            Worth noting, that I do opportunity charge a lot for free, so that also reduces my personal cost.

        2. Rick says:

          Kdawg, you’re leaving out the cost of the battery, a common omission for EV proponents. Using your numbers:

          Gas
          12000/50mpg*$3.50 = $840/year
          Electricity
          12000 miles * 0.25 kWh/mile * $0.22/kWh = $660/year

          Now add the battery cost:
          $10,000 / 100,000 miles = $0.10 per mile “battery consumption” X 12,000 miles = $1200
          + $660 electricity = $1860 / year vs. $840 for ICE

          I understand you used outlying numbers to prove a point, and I’ll let you recalculate using more reasonable numbers. But you just cannot ignore the cost of the battery.

          1. ModernMarvelFan says:

            Why do you think you need to replace the battery after 100K miles?

            Tesla Roadster owner survey has shown that after 90K miles, most of them still have over 90% of the range….

            If you want to add the cost of battery, then would you like to add the cost of oil change, transmission fluid change, engine fuel filter, spark plugs, fuel filters and various xxxx miles service cost to the ICE car as well?

      2. Mark H says:

        I might get struck for saying so, but a 50mpg is a step in the right direction. Much more so than a 38mpg hybrid if you can not see your way to an EV. At $.22/kWh you are still 2-1 savings, and better still you can beat the numbers by going solar.

        Now before you say you can not, you still live in a free country where you have choices This will sound ugly and I don’t meant it to come out that way, but I chose to start saving in my 20s and retired @ 42. Of all of my frugal decisions, nothing has inspired me more than the combination of EVs and solar.
        http://insideevs.com/video-tesla-model-s-gallons-of-light/

        1. sven says:

          I’m not following you on how you come up with a “2-1 savings” at $.22/kWh.

          For the record, I said that I “would still get another EV for my next car” even though I pay $.22/kWh for electricity. I currently own a Volt, but want a BEV for my next/second car. I also want to go solar, but have a flat roof and some shade issues (less on an issue now with micro inverters). I’m currently researching my options for going solar within the next two years. 🙂

    3. Jeff D says:

      Sometimes the limit is set by how much of a loan they can get. Maybe if the banks understand the savings in gas, they will allow for a higher loan.

  3. Warren says:

    As pollution, and efficiency standards kick in, people will find it harder to find an ICE at these prices too. The market for anything with a loophole, to keep price down, will be big, as will used vehicles.

  4. Anthony says:

    The question to ask is – how many of the 71% indicated above own and live in a single family house with a garage or carport where they can install a charging station for nightly use?

    If they live in an apartment, they’re not likely a candidate for an EV (at least not anytime soon, not until EV charging becomes widespread enough).

    If they live in a town home or condo with on-street parking, they’re not likely a candidate for an EV.

    If they rent a house, they’re not likely a candidate for a pure EV (a Volt might work – charging at 120V – but then again, if they’re renting can they afford a Volt?).

    **

    For the time being EVs are naturally limited to those who can plug-in every night. For now, that’s a large enough addressable market, but at some point we’ll need to address issues like EV charging at apartment and condo complexes, getting landlords to install them, etc.

    1. sven says:

      “For the time being EVs are naturally limited to those who can plug-in every night.”

      I agree. Those who want an EV but can’t plug-in every night have plug envy, and will have to settle for a hybrid.

    2. kdawg says:

      Workplace charging would also work, and it may be easier to convince employers to install plugs than landlords. However, personally, given the choice, I would prefer to charge at home verses work, even if the one at work was free.

  5. I rent and drive only EVs. Installing an EVSE is not always expensive – usually no more than a dryer plug, which often already exists in a garage. If your commute is under 20 miles each way, 120v charging might even be viable. ( 10 hours of charging per day).

    If you rent, but can charge at work, that’s another easy solution.

  6. The “recently conducted a survey of 1,084 consumers” of what they “hope to spend” … ” on their next new vehicle purchase”. For interesting comparison, Dept. of Energy has posted what consumers on average have spent from 1906 to 2006 (in 2008 dollar equilivant).

    Fact #541: Average New Car Prices: The Past 100 Years
    http://www1.eere.energy.gov/vehiclesandfuels/facts/m/2008_fotw541.html
    – chart of new car data 1906-2006 normalized to 2008 dollar equivalent
    – posted by Dept. of Energy

    A sample of years from DoE table of “Average new car prices”
    – 2012 $30,274 (ref: “Is $30,000 Cheap”, *URL below)
    – 2006 $23,296
    – 1940 $11,499 … year of “lowest” average new car price … from the only period 1938-1947 (war years), where avg. new car price fell below $15,000
    – 1908-1912 ~$28,000 … years where EVs were 20-30% of all US vehicles (when only 15-20% of homes wired for electricity)

    * Is $30,000 Cheap? New-Car Transaction Prices Rose from August 2012
    http://blogs.wsj.com/drivers-seat/2012/09/04/is-30000-cheap-new-car-transaction-prices-rose-in-august/

    FYI: The survey’s $25,000 price point does make sense based on the average price “the last time” a consumer purchased a vehicle. (Average consumer vehicle age is currently 8-10 years old).

    1. kdawg says:

      Fact #541: Average New Car Prices: The Past 100 Years
      How is that average calculated? Is it a weighted average?

  7. Ocean Railroader says:

    Me along with the other 71% of the population is waiting for the price of a plug in car with 150 miles range to drop below $25,000.

    The thing facing EV’s is a lot of people is that if you are going to own one car or need a new car to take the work loads off of the older cars that you have. You are going to want this new car to take on your long distance trips and a EV has to be able to do this as a primary car. In that a lot of people by new cars to be their primary car.

    I’m starting to suspect that if Nissan doubled the range of their leaf they could get here a lot faster then Tesla.

    1. Mark H says:

      If you are going to own one car, then a PHEV or EREV is the way to go. Or a Model S of course.

  8. evnow says:

    I think 29% is a very large chunk of the market to go after. Afterall that is 4 Million vehicles a year in the US.