High Costs and Complexity Drive Americans to Rethink Their Love Affair with Cars

Key Takeaways:

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1. Rising Costs of Ownership: The average cost to own and operate a car reached $12,296 annually in 2024*, a 30% increase over the past decade, driven by higher prices for new and used vehicles, insurance, and repairs.
2. Aging Fleet: The average age of cars on U.S. roads is now 14.5 years, as middle-income buyers are priced out of new vehicles, pushing demand for used cars, which now average $25,500*.
3. Repair Costs Soar: Repair costs have risen 43% in six years, with the average repair costing $838* in 2024. Complex technologies like ADAS (Advanced Driver-Assist Systems) and plastic components have made repairs more expensive and frequent.
4. Insurance and Depreciation Woes: Insurance premiums rose 10% in 2024, averaging $2,680 annually*, while new cars lose an average of $4,680 in value annually* over the first five years.
5. EV Transition Looms: Despite challenges, electric vehicles (EVs) are becoming cheaper to produce than internal combustion engine (ICE) vehicles, signaling a shift in the auto industry’s future.

What Happened?

America’s long-standing love affair with cars is being tested as the costs of ownership and operation skyrocket. New car prices now average $48,883*, while insurance, repairs, and depreciation are straining household budgets. Many families are being forced to abandon car ownership altogether, raising concerns about access to reliable transportation.

The complexity of modern vehicles, including hybrid powertrains, ADAS, and plasticized components, has made repairs more expensive and less accessible. For example, minor collisions involving advanced safety systems can result in repair costs exceeding the car’s value, leading to more vehicles being totaled.

Meanwhile, the rise of electric vehicles (EVs) is reshaping the industry. EVs are now cheaper to produce than ICE vehicles, and as battery costs continue to fall, their advantages are expected to grow. However, challenges remain, including high repair costs for EVs and insurance companies’ reluctance to cover battery-related damages.

Why It Matters?

The rising costs of car ownership are creating a transportation affordability crisis, particularly for middle- and lower-income families. With fewer affordable options, many Americans are being pushed into “second-class citizenship,” unable to access reliable personal transportation.

The shift toward electric vehicles represents a potential solution, but the transition will require significant investments in infrastructure, affordability, and repairability. Automakers’ resistance to right-to-repair legislation further complicates the issue, as consumers and independent garages struggle to access the tools and parts needed for repairs.

For the auto industry, the growing dissatisfaction with traditional car ownership underscores the urgency of addressing affordability and sustainability, while balancing the push toward electrification.

What’s Next?

As EV technology improves and costs decline, the industry is likely to accelerate the transition away from internal combustion engines. Policymakers and automakers will need to address the affordability gap, ensuring that EVs are accessible to a broader range of consumers.

At the same time, the push for right-to-repair laws could gain momentum, empowering consumers to maintain and repair their vehicles more affordably. Analysts will also monitor how automakers adapt to rising repair costs and whether they prioritize long-term durability over short-term profits.