For the past six months, I’ve been quietly toying around with purchasing a new or new-to-me electric vehicle. I looked into a lease of several on-the-lot EV specials and came across a 2024 Hyundai Ioniq 5 SE, advertised for a featherweight $89 per month, for 24 months. Of course, after taxes, fees, and my not-tier-one credit, the final price came to a little over $325 a month for a 10,000-mile short-term lease.
“That’s really a good deal. If you don’t want it, I just might take it from you myself,” the salesman told me, encouraging me to take the white Ioniq 5 that day. I was already approved, all I had to do was sign a few papers and I could take the car home with me that night. I hesitated.
Sure, the math shook out. I had the whole rundown on paper, right in front of my face, but I couldn’t help but think, “How does anyone afford this?” On paper, I make over the median wage for the state of Ohio, and should have no problems affording the car.
But when I account for rent, savings, or any other bills I’ve got to pay, spending money on this car seems like a bad idea for a car I don’t necessarily need.“I’m sure there will be similar deals when I’m ready to buy,” I told the salesman. I thanked him for his time and exited the showroom.
It turns out that I probably should have signed on the line that day. The Trump administration’s 25% tariff on basically all imported goods (including cars) is here. If we thought things were bad now, it’s about to get worse. Especially for EVs.
President Donald Trump’s tariffs are all-reaching, ranging from a minimum of 10% for countries like the United Kingdom to nearly 100% for goods from countries like Cambodia and Laos. Cars not made in the U.S. will be subject to a 25% tariff, including ones made in Canada and Mexico under the now-somewhat nullified USMCA agreement.
Photo by: Patrick George
This goes beyond just the point of manufacture and also includes parts, which may traverse the border multiple times before they’re installed. Chances are, your car has parts from suppliers like Magna, a Canadian company responsible for parts. Or Denso or Bosch, which make damn near everything in a Japanese or German car, respectivly. Or perhaps your run-of-the-mill cheap car is made in a foreign country that isn’t so far away. Your reasonably priced Chevy Blazer or Equinox EV is made in Mexico.
Now, these cars are facing a serious price increase in an era where affordability is an ever-evaporating, fleeting conquest that manufacturers are desperately chasing to preserve any semblance of sales volume.
I didn’t really need that Ioniq 5. I work at home, own other cars and drive testers as part of my job; this wasn’t necessarily a move I needed to make. But plenty of Americans do, and that’s why so many struggle with record-high car payments and even repossessions. Yet, true affordability keeps eluding them lately through no fault of their own.
Photo by: Kevin Williams/InsideEVs
“Automakers will have to pass on the massive cost increases resulting from the new tariffs to consumers, who have, since the pandemic began, already seen average new vehicle transaction prices rise alarmingly from about $39,000 at the end of 2019 to nearly $50,000 at the end of 2024,” said Ed Kim, the president of the research firm AutoPacific, a few weeks before the Trump Administration had fleshed out its universal tariff idea.
Kim was blunt. “There is little to no upside to these tariffs for the automotive industry, and new vehicle shoppers may have to weather the biggest hit to new vehicle affordability they’ve ever experienced in their lifetimes,” he said. And he’s right.
Just look at the math on the Ioniq 5 I initially intended to lease. Its MSRP was about $51,000 flat. After a discount and incentives from Hyundai, the actual lease sale price was more like $36,000. The price of the car included $13,500 in rebates, including the lease-special $7,500 IRA EV tax credit. What would those prices look like with tariff cost increases tacked onto the MSRP?
And as my colleague Patrick George wrote last week, even U.S. production can’t save the automakers completely. The newest Ioniq 5 is made in America, but with only 30% American parts content for now. Once a U.S.-made battery is added, that shoots up to about 60% American parts. Either way, whatever’s left over gets hit with tariff price increases. There’s no escape from this.
This isn’t just me bloviating about the privilege to decline a monthly car payment that’s still nearly half of what’s common for many Americans. No, these tariffs are already having a tangible effect on consumer demand. This week, AutoPacific released a new study that examines just how.
It queried buyers over the age of 18 who plan on buying a car within the next year. A whopping 75% of all surveyed said they planned on altering their purchases in some way. These new actions included financing over longer terms, choosing a cheaper car, or opting to lease instead of purchase.
A full 23% of new car buyers surveyed may just bow out and wait until the market stabilizes. Another 13% may leave the market entirely, as they don’t think they’ll be able to find a car they can afford. Keep in mind this survey was conducted well before we had the details of the new tariff scheme fleshed out.
Still, even with those who might be able to go the distance with any tariff-induced price hike, it’s not exactly inspiring as to how much of a runway there is for that. The survey showed that 52% of new car buyers who agree to pay more than they originally planned would be willing to pay an extra $3,000 to $5,000, but keep in mind that the remainder wouldn’t. Similarly, buyers who finance more car than they intend, the majority surveyed were only willing to pay about $100 extra per month.
These tariffs threaten cheaper models, bigly. Sure, a buyer of a say, a Blazer EV may be persuaded to buy a marginally cheaper Equinox EV. But a buyer who may have only been able to afford an Equinox EV may have to buy a used car. Or just exit the market entirely. That’s bad for electric car growth, which is bad for America’s ability to grow its battery industry to make cheaper electric cars down the line—and obviously bad for the environment too.
Affordability is a big concern for all types of cars, but especially EVs. To assume that tariffs won’t have an effect on prices is naive, or that, say, Hyundai won’t try and spread the tariff costs on other imported models (like the Sonata or Kona) across its lineup to ease the burden. That is, unless you’re the president of the U.S, and think you can simply command automakers to “not raise prices” while increasing the costs to make them is somehow a feasible goal.
Imported models like the Toyota BZ4X and Hyundai Kona Electric are now subject to a new 24% and 25% tariff, respectively. The not-so-good VinFast VF8 is now subject to an untenable 43% tariff, making an uncompetitive car a nonstarter. Cars like the Mini Countryman SE are already a hard bargain at $50,000; add on a tariff (and lack of IRA tax credit), taxes, and the payment for that car could easily touch the four-figure range.
For much of middle America, that’s equivalent to a house payment. That is literally unpayable.
“Now more than ever will affordability be a major worry for most Americans, regardless of who they voted for, and regardless of who they blame,” said Robby DeGraff, the Product and Consumer Insights manager at AutoPacific. “These tariffs are going to seriously hamper many consumers’ ambitions. Whether that be taking a trip, making a key fix to their home, or purchasing a vehicle. Beyond that, our wallets are going to get squeezed at the pump, at the grocery store check-out line, you name it. Tariffs almost always end up hurting the consumer.”
And DeGraff said he’s especially worried about the downstream effects. “I’m concerned about our auto industry because it’s a domino effect; vehicle prices go high, consumers either wait or go used, demand falls, production pauses, plants go dark, and layoffs begin,” he said.
Buckle up, because we are in for a rough ride. And it’s clear that the Trump administration has no clue just how bad things can get for the average American consumer.
Contact the author: Kevin.Williams@InsideEVs.com
