A few years ago, industry talk was that by 2025, fully electric vehicles would achieve financial parity with combustion engine vehicles. It is assumed that this will be achieved gradually by increasing battery production and exploiting economies of scale. However, the reality is different as the world is now facing record high prices across the board. The price hikes by manufacturers and dealers have pushed the average electric vehicle bill to $54,000, according to JD Power, about $10,000 more than the typical transaction price for a gasoline-powered vehicle.
Almost all cars are priced below 2020 levels as economic pressure pushes up the value of all cars. But the all-electric model’s rise actually outpaces what we’ve been told should be replaced.
Manufacturers cited inflation as the culprit. But material shortages also played a role, as it became increasingly difficult to source raw materials for battery production. Over the past few years, manufacturers have struggled to increase their own supply and/or build strong relationships with relevant suppliers. But it was already hard to keep up with demand until pandemic-related shutdowns hampered supply chains. Today, the industry finds itself in a situation where countries are increasingly picky about export destinations as demand grows, supply becomes tighter and inflationary pressures mount.
according to Wall Street Journal, setting off a perfect storm for the industry, and companies are doing their best to keep up. Unfortunately, keeping pace means accelerating electrification plans that initially seemed risky and raising prices to outpace inflation.
of Wall Street Journal:
Last week, General Motors raised the price of its GMC Hummer electric pickup model by $6,250, which is now between $85,000 and $105,000, citing higher merchandise and logistics costs. A GM spokesman said the waiting list for the recently released truck is about two years old.
This year, Tesla tripled the price of the performance version of its best-selling Model Y SUV, for a total increase of about 9 [percent] The list price is $69,900, according to Bernstein Research.
Overall, the average price to buy an electric vehicle in the U.S. rose by 22% in May [percent] Compared to a year ago, the price is around $54,000, according to JD Power. By contrast, the average price of an internal combustion engine vehicle rose by 14 [percent] During this period, it was about $44,400.
The companies said they were trying to offset recent increases in raw material prices for the batteries used to power electric vehicles, by far the most expensive components in electric vehicles. Prices of lithium, nickel and cobalt have roughly doubled since the start of the Covid-19 pandemic, according to consultancy AlixPartners LLP.
Last week, Ford Chief Financial Officer John Lawler said unprecedented commodity spending on electric vehicles has wiped out profit margins on the Mach-E crossover. In response, it raised prices and revised its EV leasing policy to ban buybacks in the U.S., allowing itself to recycle more batteries. But for the brand, it’s really just an easy way to keep the most expensive parts on an EV, sell it to customers on their next lease, and prevent anyone from getting a good deal on a product that isn’t included in the Rents in times of high inflation. Toyota and other automakers offer similar concepts, often referring to them as “closed-loop battery ecosystems.” They don’t always work the same way (despite similar terminology).But the overall goal remains the same: keep gear as close as possible, and still Tell the public it’s for the good of the environment.
Insidious or not, the industry really has no choice. If automakers want to keep selling cars in places like China or the European Union, they will have to start complying with extremely strict emissions regulations. You are invited to discuss whether these regulations are the result of lobbying by large, well-known companies to make life more difficult for small automakers, players looking to directly control the market using ESG scores and false environmentalism, or necessary steps to ensure the well-being of the planet. But that still won’t change the status quo in today’s market. The rules are in place, the investments are made, and the cars are here now, leaving a precious little wiggle room for the struggling economy.
The industry’s preferred solution is to enter into agreements with material producers. While that could lead automakers to expand into areas of business they had previously overlooked, executives say it’s the only way to ensure they can continue to produce batteries at the pace necessary to eventually integrate electric vehicles.
Fortunately for automakers, overall demand remains relatively high. That’s largely due to years of production cuts — at least in part their fault — and the continued hype around all-electric vehicles. The cars themselves have improved over time, with mainstream automakers moving away from small, compact EVs to more consumer-friendly models. This again calls into question the argument that it is about reducing emissions. But it has helped increase adoption, simplified billions of dollars in development spending, and ultimately gave Tesla some worthy competition.
However, not all models have seen an increase in EV prices. Older models are still priced the same as before, and GM even slashed thousands of dollars off the top of the Chevrolet Bolt because the company has already qualified for the $7,500 tax credit for electric vehicles. quota. Although it should also be noted that the vehicle has been the subject of a high-profile safety recall regarding the faulty battery unit.
When it comes to EV tax credits, as more automakers reach capacity, most (except Tesla, ironically) are asking the U.S. to update or expand previous programs. The Biden administration has pushed this too, but has run into trouble proposing to tie additional economic incentives to union jobs. The survey also showed that while the public is still showing interest in all-electric vehicles, after two years of high public spending, there may be a lack of goodwill for the incentive scheme. Although the industry believes it may be the best way to avoid EVs being seen as the best way to keep luxury cars or customers with extra zeros in their bank accounts and low-income consumers’ lanes. The expansion of the national charging network, which has also received financial assistance from Congress, is another piece of the puzzle.
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