Schaumburg, Ill., December 5, 2024 — Following several quarters of incremental growth, consumer interest in electric vehicles (EVs) re-emerged in the third quarter of 2024. According to Experian’s (LSE: EXPN) State of the Automotive Finance Market Report: Q3 2024, EVs accounted for 10.06% of new vehicle financing during the quarter—growing more than 30% compared to the previous year.
“The growth in EV financing can be attributed to two factors: the EV tax credit and more affordable models hitting the market,” said Melinda Zabritski, Experian’s head of automotive financial insights. “While vehicle pricing, particularly with EVs, continues to be a driving factor in consumers’ purchasing decisions, we’re seeing consumers lean on some of the lease incentive and rebate programs to make the overall cost and monthly payment of EVs more palatable for their specific situations.”
Interestingly, leasing accounted for nearly 45% of all new electric vehicle transactions in Q3 2024, up from 24.97% the previous year and 9.53% in Q3 2022. Part of the appeal could be attributed to significantly lower monthly payments. The average monthly payment for a new EV lease was $198 lower than the average monthly payment for a new EV loan in Q3 2024.
Among the most leased EV models, the Tesla Model 3 (13.60%) held the top spot, followed by the Tesla Model Y (9.30%), Hyundai IONIQ 5 (6.51%), Honda Prologue (5.11%) and Ford Mustang Mach-E (4.86%).
New vehicle inventory and incentives bring stability to the market
Largely driven by the availability of new vehicle inventory and incentives, captives (58.67%) continued to capture an overwhelming share of the new vehicle finance market in Q3 2024, followed by banks (22.65%), credit unions (10.07%) and finance companies (6.52%).
In addition to lender market share, the effects of increased inventory and incentives were felt across other aspects of the industry. For example, although the average loan amount ($41,068) for a new vehicle experienced a slight uptick, growing $736 compared to the previous year, the average monthly payment for a new vehicle only increased $5 over the same period, reaching $737. Meanwhile, the average interest rate for a new vehicle loan decreased from 7.09% in Q3 2023 to 6.61% in Q3 2024.
Affordability pushing some prime and super prime borrowers to return to used vehicles
While the new vehicle finance market continued to stabilize in Q3 2024, interestingly, the data showed prime and super prime borrowers may be returning to the used vehicle market. Nearly 66% of prime borrowers chose to finance a used vehicle in Q3 2024, up from 65.47% the previous year, while 48.92% of super prime borrowers followed a similar path, up from 47.96% over the same period.
According to the report, the average loan amount for a used vehicle was $26,091 in Q3 2024, down $1,195 from the previous year. Similarly, the average monthly payment for a used vehicle dropped $18 to reach $520 over the same period.
“We’ve seen the effects of the reintroduction of new vehicle inventory over the past several quarters, and it’s brought some stability to the market,” Zabritski continued. “With the re-emergence of leasing and more availability of late-model vehicles, it’ll be important to keep a close eye on how consumer preferences evolve over the coming years. It will likely shape our market for the near future.”
Additional findings for Q3 2024:
To learn more, watch the entire State of the Automotive Finance Market Report: Q3 2024 presentation on demand.
About Experian
Experian is a global data and technology company, powering opportunities for people and businesses around the world. We help to redefine lending practices, uncover and prevent fraud, simplify healthcare, deliver digital marketing solutions, and gain deeper insights into the automotive market, all using our unique combination of data, analytics and software. We also assist millions of people to realize their financial goals and help them to save time and money.
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