The top question I get asked a journalist covering electric vehicles is: "Are EVs getting cheaper?" Lately, the answer has become increasingly complex.

Electric vehicles have indeed decreased in price over time. In July 2023, the average EV cost was $53,469, an 18% dip from the previous year, according to Kelley Blue Book and $5,000 more than the overall average car price.

But while the price ceiling on EVs is coming down, the floor is coming up, in part because of expensive next-gen batteries that are required to produce desired range. Automakers must balance an appetite for experimentation against long-term profitability. This puts lower-cost models on the chopping block, and leaves budget buyers with fewer options in 2024 than in 2023.

The Sub-$40,000 Threshold

Over the past year, I've maintained a list of electric vehicles under $40,000. While it's an admittedly arbitrary cutoff, I set it because it seems to be a threshold most automakers are not yet able to hit—but that most consumers need. The list debuted in the fall of 2022 with seven models, and throughout 2023, it grew to 10 models. But in 2024, the list will drop to six—or less, as we're still waiting on a few 2024 pricing announcements.

Most new vehicles geared toward the "mass market" clock in between $50,000-$60,000. Even at that price, it's unclear if automakers can make a profit. Ford, for instance, says it will lose $4.3 billion on its EV push this year, Forbes reports.

Can GM Make Good on Its 'EVs for Everyone' Promise?

Three of the vehicles on our sub-$40,000 list come from General Motors' Chevrolet brand. That includes the $26,500 Chevy Bolt EV, which GM tried to kill earlier this year before public backlash forced it to reconsider. It's set to return at an undisclosed date with an updated battery and almost certainly a higher price.

GM has spent the better part of 2023 touting its "EVs for Everyone" ethos with commercials featuring its new lineup of 2024 EVs: the Equinox, Blazer, and Silverado. But when the Blazer EV finally debuted—you may have seen it heavily featured in the Barbie movie—it cost $10,000 more than GM's original estimate.

2024 Chevrolet Equinox (Credit: Emily Dreibelbis)

That does not bode well for the Equinox EV, which GM originally said would cost around $30,000. An online petition is asking GM to keep the $30,000 price for the Equinox. "General Motors has branded itself as an electric vehicle leader but has failed to meaningfully deliver on early EV promises," it reads. "It continuously pushes back production deadlines and favors high-priced luxury EVs over ones most families can afford." (That includes the $130,000 Cadillac Escalade and $300,000 Cadillac Celestiq.)

The Best Budget EVs Now Start at $35,000+

Until we get details on the next-gen Chevy Bolt, the $28,000 Nissan Leaf is the cheapest EV with 2024 pricing locked in. One major drawback: Nissan failed to update its outdated charging port (CHAdeMO) for the 2024 model year, which limits the number of stations where drivers can power up on the road.

Then there's the stylish but low-range Mini Cooper, which started at $30,900 in 2023, with a 114-mile range. We're still waiting on 2024 pricing and range, though it's expected to clock in around 200 miles, or about 50-100 miles less than the market average in 2024.

Volvo EX30 (Credit: Chris Janaro/PCMag)

Beyond those two limited choices, the cheapest EVs with modern battery and dash technology start around $35,000.

The Volvo EX30 is the only brand-new model to join the sub-$40,000 list this year. With its 275-mile range, or just as much as the base Tesla Model 3, it's an exciting new option for families and young drivers. Why is it more affordable? We have one clue: Volvo will produce it in China, at a factory operated by Geely, which acquired Volvo in 2010, Reuters reports.

Malory Van Guilder put an early deposit down on an EX30, her first EV, because she found it to be the best-looking, lowest-cost option from a reputable brand.

"I really love the Rivian models and so many other brands, but the price point is a nonstarter," the 28-year-old says. "For my first EV, I’m not willing to spend $60,000 to see if I like it or if it works for me. I did consider a Tesla Model 3 due to the tax credit, and the Hyundai Ioniq 5, because the reviews for that vehicle are so strong. I decided I didn’t want a Tesla and the Volvo just looks, to me, better than the Hyundai."

Price-conscious buyers will also want to check out the 2024 Hyundai Kona Electric, which is expected to start around $35,000. Early reviewers say it is a major improvement over the 2023 version, with stylish looks and a capable battery platform with two sizes to choose from.

2024 Hyundai Kona Electric (Credit: Emily Dreibelbis)

The Chevy Equinox may also end up around $35,000, but we'll have to wait and see if GM sticks to the $30,000 estimate or jumps it up $10,000 like the Blazer. Both vehicles use the new Ultium battery platform, which drives most of the cost. More on that below.

The remaining sub-$40,000 options include the Volkswagen ID.4 and Kia Niro. The former suffers from inventory issues and has been unavailable to purchase since early 2023, all but ruling it out. The 2024 Kia Niro starts at $39,000 with a 253-mile range.

Who Is the Federal Tax Credit Really Helping?

The US government offers up to $7,500 in EV tax credits, but strict requirements limit the number of eligible vehicles and buyers. From our list, only the Chevy Bolt EV/EUV, Chevy Equinox, and Volkswagen ID.4 apply. All the others are produced abroad, disqualifying them.

Here's the rub: If there are fewer lower-priced EVs on the market, there are fewer people likely to benefit from the federal tax credit who need it.

The Tesla Model 3, now just over $40,000, does qualify for the full credit. However, those who can spend $40,000 or more on a vehicle aren't necessarily the target audience for government support. And there are income caps for eligibility: $150,000 for individuals, $225,000 for head of household, and $300,000 for married or jointly filing.

The Future of Affordable EVs Relies on the Battery

The main reason average EV prices have declined since last year is Tesla's dramatic price cuts. Around 60% of new EVs sold are Teslas, and the brand slashed its costs by as much as 20% on the best-selling Model Y to keep that market share. This created price pressure for other brands, causing Ford to shave off a few thousand dollars from the Mustang Mach-E.

But no Tesla or Ford EVs currently fall under the magical $40,000 threshold. The key to opening up that price for more brands lies in reducing battery costs, which make up nearly half of the automakers' materials expenses due to minerals like cobalt and nickel. Prices for these costly elements have declined in recent years, but consumers are not yet seeing significant benefits.

Rivian battery pack (Credit: Emily Dreibelbis)

The reasons why are complex, but one factor is that China controls nearly the entire global battery supply, forcing US automakers to purchase packs from them. The Biden administration has allocated billions to foster a domestic battery industry, but that could take decades.

In the meantime, automakers are switching to lower-cost lithium iron phosphate (LFP) batteries. Tesla, Rivian, and Ford have already implemented them in their base models in hopes of turning a profit. However, they have drawbacks, such as reduced range and poor cold weather performance, so the industry is largely keeping quiet about them rather than touting some battery tech breakthrough.

Making the future of LFP more complicated, Ford's attempt build LFP packs domestically—to reduce costs while keeping the packs tax credit-eligible—got put on hold this week over concerns about licensing Chinese technology, The Wall Street Journal reports.

So US automakers, and US consumers, find themselves at an impasse. What will be the magical breakthrough that makes affordable EVs commonplace? From what we're seeing lately, that dream looks to be at least five to 10 years away with no silver bullet solution.