EV Market Expansion: The Shift Towards Non-Luxury Vehicles

Amid interest rates leveling out and some lenders reassessing go-to-market strategies, the automotive finance landscape is experiencing notable shifts in market share. According to Experian’s State of the Automotive Finance Market Report: Q1 2025, banks recouped some of their total finance market share for the first time in several years, reaching 26.6% during the quarter, up from 24.8% a year ago. On the other hand, captives’ total market share declined from 31.3% to 29.8% year-over-year and credit unions experienced a modest increase from 20.2% to 20.6%. Despite the overall market share shifts, captives continue to lead in new vehicle financing at 57.1% in Q1 2025, although down from 62.1% the year prior. Meanwhile, banks increased to 24.1% this quarter, from 20.4% in Q1 2024 and credit unions went from 9.6% to 10.9% during the same period. On the used side, banks and credit unions were grouped much closer together. Banks led the way with 28.4% of the used finance market in Q1 2025, up from 27.9% last year, while credit unions went from 27.7% to 28.2% year-over-year and captives declined from 8.5% to 7.4%. As market share movement continues to be a valuable indicator of shifting strategies and consumer behavior, it’s important for automotive professionals to keep a close eye on these shifts to uncover new opportunities while looking for ways to stay ahead of the rapidly evolving industry. Breaking down the latest finance trends Data in the first quarter of 2025 shows the automotive finance market continues to stabilize as automotive professionals gain clearer visibility into lender behavior and consumer demand. For example, the average loan amount for a new vehicle increased $1,110 year-over-year to $41,720 in Q1 2025. However, the average interest rate dropped from 6.9% to 6.7%, and the average monthly payment went from $737 last year to $745 this quarter. For used vehicles, the average loan amount saw a slight uptick of $90 year-over-year, reaching $26,144 this quarter. Meanwhile, the average interest rate declined from 12.4% last year to 11.9% this quarter and the average monthly payment trended lower at $521, from $524 in Q1 2024. Monitoring and leveraging market share shifts and financing trends can support strategic planning while empowering automotive professionals to anticipate consumer purchasing patterns and tailor conversations more effectively to meet buyers where they are during their car buying journey. To learn more about automotive finance trends, view the full State of the Automotive Finance Market: Q1 2025 presentation on demand.

Electric vehicles (EVs) continue to gain traction in certain markets. In fact, at the end of 2024, 9.2% of all new retail registrations were electric, up from 8%+ in 2023 and 6%+ in 2022. Clearly, more and more in-market shoppers are leaning towards EVs, but what is actually a determining factor in their decision? A recent Experian survey [1] found 65% of respondents said they prioritize battery life, while 62% consider price, 58% are concerned with range on a full battery and 53% are focused on infrastructure and maintenance. It’s not just EVs, hybrids are getting into the mix While EVs certainly are the buzzword in the industry, it’s not the only alternative fuel type consumers are opting for. For instance, 55% of respondents said they’d consider a new hybrid and 50% said they’d consider a new EV for their next vehicle purchase. On the used side, 38% of respondents said they’d consider an EV and 42% would consider a hybrid. More granularly, the survey revealed 67% of Gen Z and 61% of Millennials are likely to buy a new EV, while 62% and 63% of these groups, respectively, expressed similar intentions for purchasing new hybrid. Gen Z and Millennials also showed a stronger-than-average interest on the used side, with 57% and 49% opting for EVs, and 57% and 52% choosing hybrids. With the younger generations gravitating towards these fuel types, it’s likely going to influence adoption rates down the road, a trend that should be watched closely as manufacturers roll out more models to meet the growing demand. However, when assessing the viewpoints of other generations, some are less likely to purchase an alternative fuel type. Two-in-five, albeit still a healthy percentage, of Gen X respondents said they’re likely to purchase a new EV and only 25% of Baby Boomers shared a similar sentiment. Meanwhile, 27% of Gen X and 12% of Baby Boomers say they’re likely to purchase a used EV. Furthermore, 46% of Gen X and 43% of Baby Boomers indicated they are likely to buy a new hybrid, while 33% and 21% of these groups, respectively, conveyed similar thoughts towards purchasing used hybrids. It’s crucial for professionals to stay attuned to shifting trends and concerns among consumers, as these factors play a role in consumer decision-making. By addressing potential setbacks and knowing where their target audience is, they can better align their strategies with consumer needs as these fuel types continue to move up on the list for everyday commuters. To learn more about EV insights, visit Experian Automotive’s EV Resource Center. [1] Experian commissioned Atomik Research to conduct an online survey of 2,005 adults throughout the United States. The sample consists of adults who estimate they will purchase or lease their next vehicle within the next 24 months or sooner. The margin of error is +/- 2 percentage points with a confidence level of 95 percent. Fieldwork took place between March 24 and March 27, 2025.

While many industry pundits are assessing how macroeconomic changes may impact the future of the automotive market, recent data suggests consumers tend to stick to specific fuel types. According to Experian’s Automotive Market Trends Report: Q4 2024, over the last 12 months, 77.5% of electric vehicle (EV) owners replaced their EV with another one, with 15.6% returning to gas-powered vehicles. Meanwhile, 82.2% of gas vehicle owners replaced it with the same fuel type, while only 4.7% made the switch to electric. It’s important for professionals to recognize that most consumers tend to replace their vehicles with the same fuel type. Additionally, knowing who is making these purchases and the types of vehicles being registered allows better anticipation for consumer needs and ultimately enhances the buying experience while fostering consumer loyalty. Breaking down fuel types by generation Through Q4 2024, Baby Boomers predominantly registered new gasoline vehicles, accounting for 74.7% of their choices, while 15.9% opted for hybrids and 6.6% chose EVs. Millennials showed a similar trend, with 69.2% registering gas vehicles, followed by 15.1% selecting hybrids and 12.5% choosing EVs. Gen Z also favored gasoline vehicles at 74.0%, with hybrids making up 14.3% and EVs at 9.1% of their registrations. Although gasoline vehicles account for the majority of new registrations, EVs and hybrids are steadily gaining ground, particularly among the younger generations who are drawn to advanced features that align with their preferences. This will likely play a role in shaping the future of vehicle registrations as more gas alternative models hit the market and consumers make the switch. To learn more about vehicle market trends, view the full Automotive Market Trends Report: Q4 2024 presentation on demand.