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If you’ve dropped by a car lot lately and received a severe dose of sticker shock, you’re not just imagining things.
The average transaction price for a new vehicle in the U.S. surpassed $50,000 for the first time, according to a new estimate by Kelley Blue Book.
The price climb has even alarmed car dealers in California, the state with the most drivers in the nation and the place that has long defined car culture in the U.S.
“That’s really concerning because what that means is that only wealthier Californians are going to be able to enter the new car market,” said Brian Maas, president of the California New Car Dealers Association.
“And that’s not good for the industry, it’s not good for consumers, it’s not good for dealers, it’s not good for the automakers. We need a broad range of consumers to be in the new car market and if only wealthy folks are buying those cars, that’s a concern.”
The average price has been on a steady rise for years and analysts with Cox Automotive, which owns Kelley Blue Book, attribute the most recent increase to a combination of factors.
That includes tariffs imposed by the Trump administration, but they said prices in September were mostly driven by “a healthy mix” of electric vehicles that tend to be more expensive than gasoline-powered cars and trucks plus higher-end vehicles that pushed the average price to new heights.
“We’ve been expecting to break through the $50,000 barrier,” Cox Automotive executive analyst Erin Keating said in a news release. “It was only a matter of time, especially when you consider the best-selling vehicle in America is a pickup truck from Ford that routinely costs north of $65,000. That’s today’s market, and it is ripe for disruption.”
The average transaction price came to $50,080 in September, up 2.1% from August and 3.6% higher year-over-year.
According to the Kelley Blue chart, the average price in the U.S. hit $40,000 in March 2020.
Cox Automotive reported that last month there were more than 60 models with average transaction prices above $75,000 — and they accounted for 7.4% of total industry sales, up from 6% at the same time last year.
The two versions of Cadillac Escalade, priced at six figures, recorded September sales of 4,320 units in the U.S.
The Cox report said the average price for an EV in September came to $58,124, some 3.5% higher than in August.
“While there are many affordable options out there, many price-conscious buyers are choosing to stay on the sidelines or cruising in the used-vehicle market,” Keating said. “Today’s auto market is being driven by wealthier households who have access to capital, good loan rates and are propping up the higher end of the market.”
Another factor accelerating sticker prices is the amount of high-tech featured in new cars, such as infotainment systems with large touchscreens, automatic emergency braking, in-car Wi-Fi, battery systems in hybrids and semi-autonomous driving in electric and high-end vehicles.
“It’s not the vehicle you and I may have grown up driving in the 1970s, 80s or 90s,” Maas said.
The popularity of SUVs, which typically cost more than sedans, has also contributed to the average price going up.
“Figuring out how you make a profitable-entry level car … that’s the trick,” Maas said ” And I think the smart manufacturers are looking around and trying to figure out how can we do that? Because there’s a giant market to be tapped there. If you can figure out how to make a $25,000, $30,000 entry-level vehicle, you’re gonna kill it in this market, I think.”
Breaking the $50,000 barrier comes as third-quarter figures saw a leap in registrations of EVs and plug-hybrids. A record number of customers jumped on the zero-emissions bandwagon before the expiration of federal tax credits.
Tesla’s Model Y remained the top-selling vehicle in California, with 35,336 deliveries in the third quarter alone and 79,448 from the start of this year through Sept. 30, according to data from Experian Automotive, posted by the California New Car Dealers Association.
Toyota’s RAV4 came in a distant second place, with 49,584 registrations so far this year.
The market share for purchases of new cars and light trucks that qualify as zero-emission vehicles by California policymakers — EVs, plug-in hybrids and hydrogen fuel cell vehicles — accounted for 24.7% of the market share in Q3, up from 18.2% the previous quarter.
But the federal tax credit of up to $7,500 on the purchase or lease of a new EV, and as much as $4,000 on a used one, came to an end on Sept. 30. The expiration was part of the 940-page federal budget legislation dubbed the “One Big Beautiful Bill” backed by Republicans on Capitol Hill and signed into law in July by President Donald Trump.
“There was definitely a pull-ahead effect” by consumers to buy EVs before the Sept. 30 deadline, Ivan Drury, senior manager of auto insights at Edmunds.com, told the Union-Tribune earlier this month. “So you would expect to see that October sales should be down a bit.”
The question will be how much the loss of the incentives will affect sales of EVs and plug-in hybrids.
Nationally, electric vehicles make up about 8% to 12% of auto purchases.
Speaking at a conference Sept. 30, Ford CEO Jim Farley said, “I wouldn’t be surprised if EV sales in the U.S. go down to 5%,” adding that while the zero-emission sector will remain a “vibrant industry” going forward, it’s also “going to be smaller, way smaller than we thought.”
The chairman of Nissan’s Americas region told the Wall Street Journal that October should be the worst market in years for EVs. “Manufacturers are going to have to push cars away because demand is not going to be there,” Christian Meunier said.
But California political leaders and regulators say they’re confident the state will reach its aggressive zero-emission vehicle goals.
Gov. Gavin Newsom issued an executive order five years ago mandating the elimination of sales of all new gasoline-powered passenger vehicles throughout California by 2035.
In June, President Trump signed three Congressional Review Act resolutions rescinding California’s electric vehicle mandates — as well as rules related to diesel engines. But California and 10 other states have filed a lawsuit, arguing that Trump’s actions are unconstitutional and beyond the authority of Congress.
“We’re setting new records because this state believes in innovation, not isolation,” Newsom said of the state’s third quarter zero-emission sales figures. “While Trump sells out American innovation to China, California will keep charging ahead on our path to a future of cleaner air.”
Regardless of powertrain, the California New Car Dealers Association projects new car sales in the state will come to 1.79 million for all of 2025, improving upon the 1.75 registrations recorded last year.
Top-selling vehicles in California this year
Registrations through September 2025
Source: Experian Automotive/California New Car Dealers Association
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