Significant reductions in prices alongside ample availability have the potential to breathe new life into the electric vehicle (EV) market, which has already achieved remarkable sales records in 2023.
Based on data from Cox Automotive, as cited by Kelley Blue Book, the average transaction price for brand-new electric vehicles in June stood at $53,438, marking a notable 20% decrease from its peak of $66,390 in June 2022.
Instances of Tesla offering discounts were pointed out by Kelley Blue Book as illustrations of the downward trajectory in EV prices in June. This shift can be largely attributed to Tesla’s decision, as highlighted by the Financial Times, to significantly slash its prices by up to $13,000 in January, subsequently setting off a competitive pricing battle within the industry.
In response to Ford’s substantial reduction in the purchase cost of its Mustang Mach-E, Tesla also adjusted the pricing of its Model S and Model X models to be more competitive in March.
Ford has continued to drive down prices, extending savings ranging from $6,079 to $9,979 across seven variations of its F-150 Lightning models, as reported by The New York Times in July.
General Motors has also joined the trend towards making EVs more accessible by announcing price cuts for the Bolt model in June.
During the second quarter of 2023, close to 300,000 new electric vehicles were sold in the United States, marking a historic high for any quarter and representing a nearly 50% surge compared to the same period last year, according to Cox Automotive.
Cost reductions in crucial raw materials necessary for electric car batteries, such as lithium, nickel, and cobalt, have enabled these savings to be passed down to consumers. Tesla’s CEO, Elon Musk, embraced this development, noting in a company earnings call that the lithium market had experienced a period of considerable volatility.
While the EV market displays positive signs, there remains an incongruity between supply and demand. Michelle Krebs, the executive analyst at Cox Automotive, described this situation as a departure from the previous year, where demand is struggling to keep pace with production – a scenario she likened to a ‘Field of Dreams,’ wherein automakers are ramping up output, but consumer interest has yet to fully materialize.
Krebs also noted that, in comparison to the broader market, the current state of availability is not necessarily unfavorable. She highlighted that, unlike a year ago when average EV prices surpassed those of luxury vehicles, EV prices are now moving closer to the industry average as inventory and accessibility expand.