New-vehicle prices in the U.S. rose in August, driven by the arrival of pricier 2026 models and a record-breaking month for electric vehicle (EV) sales, according to the latest data from Kelley Blue Book. The average transaction price (ATP) for a new vehicle climbed to $49,077, marking a 0.5 percent increase from July and a 2.6 percent rise year over year.
The August report saw price increases in both major indicators, with both ATP and Manufacturer’s Suggested Retail Prices (MSRP) showing month-over-month and year-over-year gains. The average MSRP hit $51,099 in August, up 3.3 percent from the previous year, the largest gain recorded in 2025. Despite the higher prices, retail sales remained strong, climbing 2.5 percent compared to August 2024.
Automaker incentive spending saw a slight dip, falling to 7.2 percent of the ATP from 7.3 percent in July. Over the past year, incentives have remained relatively stable, averaging 7.2 percent of ATP, suggesting a disciplined market approach from manufacturers.
“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, 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.”
Automaker Price Trends
Price increases were widespread across the industry. Of the 31 major brands tracked by Kelley Blue Book, 26 posted higher transaction prices in August compared to the previous year. Seventeen of those brands saw price gains exceeding three percent. Only five brands recorded lower year-over-year prices, with Acura dropping 6.5 percent and Tesla dropping 5.5 percent, leading the declines.
The popularity of expensive vehicles like full-size pickup trucks continues to influence the industry’s overall ATP. Four of the top 10 best-selling vehicles in the U.S. are full-size pickups, including the Ford F-Series with an ATP of $66,934 and Chevrolet Silverado with an ATP of $61,023. The GMC Sierra at $70,150 and Ram pickup at $65,849, also made it into the top ten.
EV Sales Surge Ahead of Tax Credit Expiration
The EV market experienced a significant boost in August, setting a new monthly sales record of 146,332 units. This pushed EV market share to a record 9.9 percent of total vehicle sales, up from 9.1 percent in July. The rush to buy is likely fueled by the impending expiration of government-backed EV tax credits at the end of September, with Kelley Blue Book predicting that the third quarter of 2025 will set an all-time record for EV sales.
The average transaction price for an EV rose to $57,245 in August, a 3.1 percent increase from July but nearly unchanged from a year ago. EV incentives, while down from July’s record high, remained substantial at 16 percent of ATP, averaging more than $9,000 per vehicle.
“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,” said Stephanie Valdez Streaty, Senior Analyst, Cox Automotive.
Despite the booming EV market, industry leader Tesla saw its market share decline. Tesla’s U.S. sales were down 6.7 percent year over year, and its share of the EV market fell to 38 percent—its lowest point in the modern EV era. While Tesla’s ATP climbed 2.9 percent in August, it remains 5.5 percent lower than a year ago.
“The one constant in the automotive business is that fresh product sells well,” added Valdez Streaty. “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.”
Related Stories: