U.S. new vehicle prices continued their upward climb in August 2025, underpinned by the arrival of next model year inventory and a surge in electric vehicle (EV) purchases ahead of the federal tax credit expiration on Sept. 30, according to new data from Kelley Blue Book.
The average transaction price (ATP) for new vehicles hit $49,077 in August, rising 0.5% from July and 2.6% annually — the largest annual gain in over two years yet still below historical norms. MSRP rose 3.3% year over year, the strongest 2025 gain, to just over $51,000. Incentives softened slightly to 7.2% of ATP.
"While new-vehicle prices continue their upward trajectory, the pace of change remains relatively measured, more a gradual correction than a seismic shift,” said Erin Keating, executive analyst for Cox Automotive. “Costs are clearly increasing, for automakers, dealers and buyers alike. This month's increase aligns with our expectations, reflecting a market that's adjusting to new production realities and consumer preferences without tipping into volatility."
EVs continued to pack a punch: a record 146,000 + units sold in August, capturing approximately 9.9% of the market.
Tesla’s grip weakened to just 38% of the U.S. EV market — the lowest since 2017, as competition from legacy automakers intensified. General Motors sold over 21,000 EVs from its Chevrolet, Cadillac and GMC brands in August.
Industry forecasts from J.D. Power and GlobalData suggest EVs accounted for 12% of retail deliveries in August, up from 9.5% a year prior.
"The one constant in the automotive business is that fresh product sells well,” said Stephanie Valdez Streaty, senior analyst for Cox Automotive. “While Tesla's Model Y update has slowed the company's sales decline, it's not getting easier for the EV pioneer because the market is now flooded with all-new, fresh EVs from mainstream competitors — consumers have more choice than ever. The current surge in EV sales is being driven by product innovation, motivated dealers, and an urgency ahead of the IRA tax credit phase-out."
