Smarter production, declining battery costs, cheaper EV car design; all of this competition pushing the prices of battery-electric cars down to near-parity with their internal-combustion counterparts.
Salt Lake City dealer Alex Lawrence, for one, has noticed a shift in the types of customers coming through his doors over the last year. Once well-to-do professionals capable of throwing $70,000 for a Rivian luxury pickup.
Lately, customers have been grabbing used Teslas for about a little more than $20,000, factoring in a $4,000 federal credit, Mr. Lawrence said.
Nicholas Lawrence, a fifth-generation rancher in Sylvia, Kan., said: “We’re seeing younger folks. “Blue-collar and white-collar entry-level folks are showing up more. Now the buy price of the car has suddenly become within reach.
Electric vehicles are looked upon by conservative politicians (and others) as toys of the liberal elite, but they are about to become much more common. Competition is growing, raw materials are cheaper and processes have improved, which is why prices are dropping. That pushes down prices even further, helped by federal tax credits of up to $7,500 on new electric cars bolstered by thousands of dollars in state incentives.
Automobile manufacturers, such as Ford, Tesla, General Motors, and Stellantis, the Jeep owner, have revealed intentions to produce electric cars for as little as $25,000.
“The electric vehicle market has reached a turning point,” stated Randy Parker, CEO of Hyundai Motor America. By the end of the year, a Georgian plant will start manufacturing electric cars. “The pioneers have arrived. They’re in their vehicles. We are now beginning to shift to a mass market, as you can see.
For those who support electric cars and the Biden administration, which wants to see half of newly sold cars be electric by 2030 as part of the president’s climate change strategy, all of this is fantastic news. Republicans may not be able to stop market forces driving down prices, even if they seize control of the White House and Congress and keep their word to eliminate subsidies for electric vehicles.
Although sales of electric vehicles have decreased recently, they are still more costly than gasoline-powered vehicles; in the United States, an average electric car was estimated to cost $55,252 in April, according to Kelley Blue Book estimates. That represents a 9% decrease from April 2023, although it is still almost $6,700 higher than the national average for all cars.
However, Mr. Slowik’s team projects that, even before accounting for government subsidies, automobiles and sport-utility vehicles with 400 miles of battery life on a full charge will be less expensive in 2030 than cars with internal combustion engines. (Pickup trucks will take a little longer to catch up with 400-mile vehicles; they need bigger batteries.)
The economic case for electric vehicles is strengthened by the decreased gasoline and maintenance expenses, which are not included in those calculations. Battery-powered cars don’t require oil changes, engine air filters, or spark plug replacements, and electricity is nearly always less expensive per mile than gasoline. Electric cars may already be a superior option for heavy drivers. In an effort to attract customers, some automakers are concurrently providing significant discounts on E.V. vehicles.
Despite the obvious downward trend in costs, there are still hazards. A research organization called Interact Analysis claims that over half of the lithium-ion batteries used in cars sold in the US are supplied by China. Because the Biden administration declared in May that it will increase tariffs on the batteries from 7.5 percent to 25 percent, those batteries will become more expensive.
Although several businesses are constructing battery plants in the US and Canada, the majority of these won’t be able to supply enough batteries to displace China for some time.
Another danger is raw materials. In the past year, the cost of lithium and other materials needed to make batteries has decreased, resulting in a reduction in the price of electric cars. However, commodities prices can rise once more.
Due to the recent slowdown in the growth of electric vehicle sales, plans to increase manufacturing have been postponed by Tesla, Ford, and other companies. However, a lot of economists predict that as the charging network expands and prices are driven down by an oversupply of models, sales will increase. According to polls, individuals are hesitant to purchase electric vehicles mostly due to high costs and the worry that they won’t be able to locate a spot to recharge.
The cost of the car is not the only item that many individuals have to think about. Apartment dwellers frequently rely on public charging outlets. In addition to being less practical, charging at public locations is typically more expensive than charging at home.
Nevertheless, there are strong factors driving down prices. As established automakers, which were sluggish to market electric vehicles, begin to apply their decades of mass production experience to the new technology, manufacturing costs are beginning to decline.
For instance, General Motors plans to launch an electric Chevrolet Equinox sport utility vehicle later this year. With an estimated range of over 300 miles, the vehicle will cost less than $30,000 after the $7,500 federal tax credit. And for the next year, the business intends to sell a new Chevrolet Bolt for even less money.
manufactured on General Motors’ Ultium platform, which consists of parts suitable for a range of vehicles, including luxury Cadillacs and pickup trucks, the Equinox and Bolt will be manufactured. G.M. has stated that its electric vehicles will turn a profit in the second half of this year. The company has reduced costs by using the same batteries and parts for several models.
According to Prateek Biswas, an analyst at the research firm Wood Mackenzie, the cost of manufacturing electric automobiles is still higher than that of internal combustion engine vehicles. However, Mr. Biswas stated that when automakers figure out ways to make the cars more effectively, such removing rare minerals from electric motors or switching to aluminum wiring instead of copper, the cost will go down.
Simultaneously, increased emissions rules are driving up the cost of manufacturing a gasoline-powered vehicle. “Moving exclusively toward E.V.s will get easier at some point,” Mr. Biswas stated.
Additionally, competition is getting fiercer. The Japanese automakers Toyota and others, who are known for producing dependable and reasonably priced cars, are only now starting to offer electric automobiles. Next year, Honda intends to start manufacturing them at a factory in Ohio.
According to Cars.com, an online sales platform, there will be twice as many totally electric cars available in the US by the end of the next year. “Anyone who desires an E.V. at a price point can now genuinely obtain an E.V.,” stated Rebecca Lindland, senior director of industry data at Cars Commerce, the company that runs Cars.com.
One may argue that used automobile prices are more significant than those of new cars. Most consumers purchase used vehicles. A thriving secondhand market greatly expands the pool of potential buyers for electric vehicles.
When the original owners purchase new vehicles, models from Tesla, Nissan, or General Motors that have been on the road for three years or longer provide inventory for dealers. Recurrent, a research company that specializes in the used electric car industry, states that more than half of the vehicles on the market are sold for less than $30,000.
A used Chevy Bolt sold for $15,000 recently, according to Jesse Lore, owner of Green Wave Electric Vehicles in North Hampton, New Hampshire. The cost was $11,000 after a federal tax credit for secondhand electric cars was applied. He mentioned that in addition to the allure of low costs, his clients prefer electric cars since they are faster, quieter, and more environmentally friendly than gasoline-powered ones as they have an electric motor that produces torque instantly.
Mr. Lore remarked, “The car is more fun than whatever they’re driving now.”