Cars Haven’t Been This Affordable In Years, Here’s How Long You Have Before Prices Rise

This website was founded three years ago, in the middle of a global pandemic that sent car prices to the moon. While cars have become slowly more affordable since peaking in 2022, my favorite affordability index shows that prices are finally down to below a level we saw before this website. That’s good news, albeit of the temporary variety.

The Morning Dump sat out yesterday as I ran through New York’s Javits Center, taking blurry photos of Subarus and getting trapped in cars. Today, we’re back, with a bit of good news followed by some bad news. Automakers are saying they’re going to pause raising rates because of tariffs, but only for so long. I’ll explain just how long you have based on what automakers are saying.

These tariffs probably help China, which already has a huge lead when it comes to electrification. That’s a risk to Tesla in China, and the last thing that Tesla needs is more risk at this point, as its sales are cratering in California. The good news for Tesla is that Musk seems to be creating an entire legion of buyers with half his genetic material.

The New Car Affordability Index Hasn’t Been This Low Since June 2021

There are many commodities, financial instruments, and items whose value can fluctuate immediately with the news. Cars aren’t quite like that. Most automakers don’t sell directly to consumers, and the complex journey from raw materials to a car sitting in a dealership, while perhaps not entirely efficient, can help shield cars from major swings.

Above is the Cox Automotive/Moody’s Vehicle Affordability Index, which looks at the weeks of income the average household would need to purchase a new light vehicle. As discussed at length in my Trimflation piece, supply shortages eventually led to a huge average increase in car costs. It’s not just that cars’ base prices rose; Automakers also stopped building as many lower-trim, affordable cars.

Initially, the shock of the pandemic led to prices dropping slightly as automakers had a ton of inventory, and people were cautioned against the kind of interactions that would lead them to test-drive cars. This period of neutral pricing also coincided with lower interest rates, but something would eventually have to give, and starting around March 2021, we saw prices climb rapidly, peaking in December 2022.

That’s changing, and there are suddenly a lot more affordable cars on the market and slightly more favorable interest rates. The index, which approached 42 weeks in 2022, just hit 36.7 weeks, the lowest level since June 2021.

“Affordability is a key consideration for consumers when vehicle shopping and has been steadily improving over the last several years,” said Jonathan Smoke, chief economist at Cox Automotive. “In 2025, we have seen improvements in affordability each month. In March, the average price of a new vehicle decreased once again. This decrease, combined with higher incomes and slightly lower interest rates, more than offset a reduction in incentives. However, the real test will come in April, when tariffs are likely to have more of an impact on the economy and the auto market.”

Like he said, I don’t think that’ll last long.

Automakers May Start Raising Prices As Soon As June, So Get A Car This Month If You Really Need One

Last November, I said you should buy your car before the next global trade war. The trade war is here. President Trump has paused some tariffs, but he hasn’t removed the 25% duty on imported cars. What does that mean for your next car purchase? Automakers built up inventories as much as they could in the last few weeks, so it looks like many of them will be able to hold the line until at least May.

Ford, for its part, lowered prices with an employee-pricing-for-everyone plan that’ll help it move its cars from now until at least later this summer.

Per Bloomberg:

Without a major change in Trump’s tariff policies, “we anticipate the need to make vehicle pricing adjustments in the future, which is expected to happen with May production,” Andrew Frick, president of Ford’s gas-fueled and electric car units, said Wednesday in a memo to dealers.

Ford vehicles built in May won’t arrive in US showrooms until late June or early July, after the conclusion of carmaker’s current employee-pricing-for-everyone promotion, the company said. The automaker also said it won’t change the price of vehicles in inventory now.

“The tariff situation is dynamic and we continue to evaluate the potential impact of tariff actions,” Ford said in a statement.

If you want a Ford, now is the time to get that Maverick or Bronco Sport, clearly. Volkswagen Group of America CEO Kjell Gruner also said basically the same about his brand yesterday at the New York Auto Show, according to Automotive News:

In April, VW told retailers it planned an “Added Import Fee” on affected vehicles once the tariffs went into effect. Gruner stressed that the added import fee, part of VW’s tariff scenario planning, has not gone into effect and was noncommittal that it would, even after the end of May.

“We need to see where tariffs are,” Gruner said. “If that goes away, the discussion goes away. That’s very easy to see. So let’s see what happens on that side.”

Gruner said that VW cannot absorb the full cost of the tariffs alone.

“The amount per vehicle is just too high,” Gruner said. “We can’t just keep absorbing it.”

This appears to be where most automakers are shaking out right now, although expect some variance.

China Is Ahead Of The World In Quality Of EV Patents: Report

The lithium-ion battery might have been invented in the United States, but it’s China that now leads the world in the quality of EV patents, according to Japanese mega-conglomerate Mitsui & Co.’s internal Global Strategic Studies Institute.

From Nikkei Asia:

Ryusuke Ishiguro, a senior manager in MGSSI’s intellectual property department, told Nikkei Asia, “Chinese players have fewer [patents], but they carefully select the ones they apply for.”

The findings underline the scope for automakers to use intellectual property (IP) licensing to help them cope with the tariffs put forward by U.S. president Donald Trump without building new U.S. factories. Licensing technology to a local manufacturer allows the patent owner to avoid tariffs and earn patent royalties. These fees are usually a certain percentage of the product price, according to Ishiguro.

MGSSI cited Chinese battery maker CATL as an example of a company working to secure royalties as U.S. restrictions tighten. Ishiguro said, “It has begun to happen that [The Chinese company] can’t sell its product but can earn patent licensing fees.”

Ford Vice Chair John Lawler had a warning about China at a conference yesterday, via the Detroit Free Press:

The real threat right now is China, he said, and tariffs only worsen domestic automakers’ ability to fight off future competition.

Not only do tariffs put the U.S. at a short-term disadvantage, Lawler said on a Bank of America conference call April 16 that they irreparably harm any other automaker’s ability to do business in North America once Chinese automakers arrive.

“I don’t think we can say no, they’re not going to come to the U.S.,” he said. “The Chinese are coming, and they are a force to reckon with.”

It should be noted that Ford is one of the companies trying to license battery technology from CATL. This is the strange new world where American companies build stuff, and the more lucrative, more important work is done by other countries like China.

Tesla Sales Slide In California, WSJ Publishes Report About Elon Baby Mama Drama

California’s auto dealers do a great job of breaking down quarterly registrations, which gives us a detailed look at the most important car market in the country. It also gives a better view of overall trends in EV adoption, as California is generally the biggest proportional and total buyer of electric cars.

So what’s the news? Zero Emissions Vehicle (basically EVs and a small handful of fuel cell-powered vehicles) registrations have generally stalled out at about 21% of total market share in Q1 2025, which is up considerably from 9.3% in 2021, but a little off the peak of 22% for all of 2024. Hybrid share continues to increase every quarter, rising from 13% in Q1 2024 to almost 18% in Q1 2025.

While Tesla is still the biggest electric automaker in the California market, its sales have plummeted along with its market share. As of last quarter, Tesla registrations dropped 15.1% year-over-year to just 42,322 vehicles. That’s still a lot of cars, of course, but it means Tesla’s market share is just 9.1% so far this year in the state, compared to almost 13.0% in 2023.

Pundits pin these issues on vehicles he’s been slow to update and his political misadventures, but there are other things going on in the Muskverse that are probably not going to help, either.

A wild report in The Wall Street Journal gets into Tesla CEO Elon Musk’s child situation under the headline: “The Tactics Elon Musk Uses to Manage His ‘Legion’ of Babies—and Their Mothers.”

Elon Musk is certainly allowed to impregnate as many women as he wants, especially if he believes that’s what’s necessary to save humanity. Normally, I would say it’s none of our business (and for the most part, it is), but Elon Musk is the business when it comes to Tesla, and reports of “Harem drama” as one mother describes it – on a major news publication like the Wall Street Journal — are yet another distraction from an executive who seems to have no end of distractions lately.

What I’m Listening To While Writing TMD

Grimes felt just a little too on the nose this morning, so here’s fellow Canadian ethereal, beat-heavy electronic band Purity Ring with their perfect “Fineshrine.”

The Big Question

If you were in the market for a new car, would you buy now or try and wait for a year for a potential market crash? What would you try and buy and what’s your price?

Lead photo: Hyundai