Experts are witnessing a strange new phenomenon in the demand for electric cars: ‘We call it the ‘Field of Dreams’ moment’
Huge price reductions and copious availability could provide a boost to the electric vehicle market, which has already seen record sales in 2023.
Cox Automotive reported Kelley Blue Book’s findings that June’s average transaction price for a new electric vehicle ($53,438) is down 20% from a peak of $66,390 in June 2022.
Kelley Blue Book (@KelleyBlueBook) tweeted about Tesla discounts as examples of falling EV prices in June.
Less than two weeks ago, Tesla began offering the first large-scale discount program in its history. This week, it doubled many of those discounts.https://t.co/DWucMxkOp7
— Kelley Blue Book (@KelleyBlueBook) June 2, 2023
As noted by the Financial Times, many of the price changes trace back to Tesla’s decision to slash its prices by up to $13,000 in January. This sparked a price war among manufacturers.
With Ford making the next big move by cutting the purchase price of its Mustang Mach-E, Tesla responded by making its Model S and Model X models cheaper in March.
Ford has made further price reductions, offering savings of between $6,079 and $9,979 on seven of its F-150 Lightning models, The New York Times reported in July. NYT Business (@nytimesbusiness) also tweeted about this.
As a result of price cuts, most of Ford’s Lightning pickup trucks will cost less than $80,000, making them eligible for a $7,500 federal tax credit.https://t.co/qJpLYhCCzG
— NYT Business (@nytimesbusiness) July 18, 2023
General Motors is also among the electric vehicle manufacturers making models more affordable, with price cuts to the Bolt model announced in June.
According to Cox Automotive, nearly 300,000 new electric vehicles were sold in the United States during the second quarter of 2023. That marked a record for any quarter and a nearly 50% boost from the same time last year.
Cost reductions for the raw materials needed to make batteries for electric cars, such as lithium, nickel, and cobalt, have also allowed savings to be passed on to consumers. Tesla CEO Elon Musk was among those to welcome the news, noting in a company earnings call that the lithium market had gone “absolutely insane there for a while.”
While there are positive signs in the electric vehicle market, supply is still far outstripping demand.
“The demand is not keeping up with production, which is the opposite story of a year ago,” Cox Automotive executive analyst Michelle Krebs told Grist. “We call it the ‘Field of Dreams’ moment. Automakers are building more, but not enough consumers have come to the field.”
But Krebs also observed that availability isn’t such a bad thing when compared to the wider market.
“A year ago, the average EV price was above the average luxury vehicle price. Today, as inventory and availability build, EV prices are moving closer to the industry average,” Krebs added.
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