Why Did Cars Get So Expensive? The cost of insurance is up 40 percent over the past two years.

In recent economic updates, inflation has shown signs of stabilization, with a moderate 2.5 percent increase compared to much higher rates in prior years. While rent levels off and grocery price hikes slow down (with some items like eggs even decreasing in price), American consumers are still burdened by one significant expense: car ownership.

**High Costs of Vehicle Ownership**

The factors contributing to the costly scenario of owning a vehicle include robust demand driven by a strong job market, unusual supply chain issues during the pandemic, and elevated interest rates. These elements not only highlight the financial strain on American households but also the broader societal drawbacks linked with car dependency.

**The State of New and Used Car Markets**

- **New Cars**: Despite a recent drop in prices for many vehicles and a good amount of unsold stock, the cost of new cars remains unaffordable for many middle-class families. This situation arose following a sharp increase in prices due to shortages in semiconductors and other pandemic-related supply chain disruptions.

- **Used Cars**: Even though the prices for used cars are seeing a decrease, they are still about 34 percent higher than pre-pandemic levels. This represents a sharp escalation that significantly outpaces general inflation rates.

**The Challenge of Financing a Car**

A significant portion of car buyers rely on loans to purchase vehicles. Current high-interest rates make financing especially daunting. Rates vary widely based on credit scores, with those having poor credit facing particularly severe rates. High-interest rates also contribute to limiting the availability of used vehicles, as owners hesitate to sell due to the high cost of replacing their cars.

**Maintenance and Insurance Costs Skyrocket**

- **Maintenance**: The cost of servicing a car has increased considerably. Modern cars, which include complex electronic systems, demand specialized and therefore more expensive care.

- **Insurance**: Auto insurance premiums have surged by 22 percent over the past year and 40 percent over two years. Factors driving this increase include higher replacement costs due to the expensive nature of modern vehicles, more frequent and severe climate-related damages, and a trend towards larger vehicles that cause more damage in accidents.

**Driving Behavior and Traffic Safety Concerns**

Recent years have seen a worrying increase in traffic fatalities and dangerous driving behaviors, exacerbated by bigger vehicles and less disciplined driving. Traffic-related death rates have surged, prompting some jurisdictions to raise fines and fees for traffic violations in a bid to mitigate this "national crisis."

**Conclusion: Reflecting on the Social Costs of Car Dependence**

The collective expense of car ownership now rivals that of renting a modest apartment in some cities, costing around $12,000 a year. This high cost mirrors the substantial social burden of America's car-centric lifestyle, characterized by extensive commutes and climate impacts. This situation might inspire greater consideration of investments in public transportation as a viable alternative.  

Cars from Hyundai and Volvo claimed five of the top 10 spots on U.S. News & World Report's ranking of the best electric and hybrid vehicles for 2024, while Tesla is shut out. 

Testers with the publication evaluated nearly 100 EVs and hybrids, scoring them based on price, driving range, performance, and other factors. The best EVs offer a mix of power, speed, and fast-charging capabilities, said John Vincent, senior editor for vehicle testing. 

"Today there's an electric vehicle for almost every segment of the market," he told CBS MoneyWatch. "Electric cars are our future. They're going to come faster than some people think, and they really solve a lot of problems."

For now, however, many motorists remain unconvinced, with concerns about range, charging speeds and reliability. Although a record 1.2 million EVs were sold in the U.S. last year, according to Cox Automotive data, that amounted to just under 8% of the automobile market. EVs have more problems and are generally less reliable than gas-powered cars, according to a 2023 study from Consumer Reports. 

Here are U.S. News' top 10 electric and hybrid vehicles for 2024.

Best luxury electric car: Lucid Air

This luxury sedan, which starts at $69,076, has the longest driving range of any EV, according to a U.S. News review.  

The Lucid Air "is a very cool car," Vincent said. "It's incredibly fast, it's incredibly efficient, and can drive 500 miles on a single charge. It's a better Tesla Model S than the Tesla Model S."

Geneva Motor Show 2024
A Lucid Air Pure fully electric car is displayed during the Geneva Motor Show 2024 at Palexpo on February 26, 2024, in Geneva, Switzerland.GETTY IMAGES

Best luxury electric SUV: Volvo XC40 Recharge

The XC40 Recharge scores well in safety, partly because it has features like lane-departure warning and traffic sign recognition, according to U.S. News. The vehicle starts at $52,450 and can travel 293 miles on a single charge. 

A Volvo Dealership Ahead Of Earnings Figures
A 2024 Volvo XC40 SUV (left) and a 2024 S90 Recharge plug-in hybrid electric vehicle (right) at a dealership in New York, New York, on Jan. 30, 2024. BLOOMBERG

Best electric SUV: Hyundai Ioniq 5

The Ioniq 5 also scores well in safety, with such features as forward automatic emergency braking and rear cross-traffic alert. The vehicle starts at $41,800 and has a single charge driving range of 220 miles. 

New York International Auto Show 2024 to open doors to visitors
A Hyundai IONIQ 5 N is displayed during the New York International Auto Show in New York, New York, on March 27, 2024.GETTY IMAGES

Best electric car: Hyundai Ioniq 6 

This spacious sedan seats five and offers a smooth ride, according to a U.S. News review. Its standard base model starts at $37,500, while a higher-end model, the Limited, starts at $53,650.

A Hyundai Ioniq 6 is displayed at a car dealership in Seoul, South Korea, on March 27, 2024. GETTY IMAGES

Best electric truck: Ford F-150 Lightning 

The electric version of Ford's most popular pickup truck has one of the most spacious cabins in its class, according to U.S. News. The base model can tow 5,000 pounds and the upgraded version can tow 7,700.

"You can move from the gas-powered F-150 to the F-150 Lightning and not notice a lot of difference in how it performs," U.S. News' Vincent said. 

Inside The 2024 Montreal Electric Vehicle Show
A 2024 Ford F-150 Lightning electric pickup truck during the Montreal Electric Vehicle Show in Montreal, Quebec, Canada, on April 19, 2024. BLOOMBERG

Best luxury plug-in hybrid: Volvo S60 Recharge 

The Volvo S60 offers some of the fastest battery charging times on the market, according to U.S. News. The vehicle can get a full charge in about nine hours with a 120-volt power outlet and in around four hours using a 240-volt outlet. The S60 comes in five different models, ranging in price from $51,950 to $58,550.

A Volvo Dealership Ahead Of Earnings Figures
The steering wheel of a 2024 Volvo S60 Recharge plug-in hybrid vehicle at a dealership in New York on Jan. 30, 2024. BLOOMBERG

Best plug-in hybrid: Kia Sportage Plug-In Hybrid

The Sportage Plug-In gives drivers a smooth ride over rough pavement and the engine has zip, accelerating from 0 to 60 miles per hour in about 7 seconds, according to U.S. News. The vehicle comes in two models — the X-Line, starting at $39,490, or the X-Line Prestige, starting at $43,990.

Best hybrid car: Toyota Camry Hybrid 

The Camry Hybrid has a "generous amount of advanced driver-assistance features, including forward collision warning, automatic emergency braking and adaptive cruise control," according to U.S. News. It comes in five models, with prices that range from $28,855 to $34,295. 

Toyota Forecasts Record Profit For Last Fiscal Year, Due In Part To Robust Hybrid Sales
A Toyota Camry hybrid is for sale at a dealership on February 6, 2024, in Chicago, Illinois. GETTY IMAGES

Best hybrid SUV: Hyundai Tucson Hybrid 

The Tucson has one of the most spacious interiors of all hybrid SUVs, according to U.S. News. The vehicle can tow up to 2,000 pounds and comes in four models, ranging in price from $32,575 to $39,715

Best luxury hybrid: Lexus NX Hybrid 

Drivers will notice this luxury vehicle's leather upholstery, large touch screen and head-up display, according to U.S. News. The Lexus NX has five models, ranging in price from $43,465 to $60,005.

Inside The 2024 New York International Auto Show
A 2024 Lexus NX 450h+ hybrid SUV during the New York International Auto Show in New York, New York on March 28, 2024. BLOOMBERG

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