After more than a decade of high electric vehicle prices, oversupply in the nascent EV market is causing EV prices to plummet. Average Tesla prices have fallen by close to 20% over the past year, and other EV makers in other major markets are cutting their prices to remain competitive in an increasingly saturated market.
For the majority of the electric vehicle industry’s lifetime, electric cars have been significantly more expensive than comparable fossil fuel-powered cars. This has undoubtedly hampered EV adoption among most drivers and limited electric vehicle ownership to the select few with plenty of disposable income.
However, the global EV market has witnessed a consistent drop in purchase prices over the past 12 months, resulting in a surge in electric vehicle purchases. EV prices in the United States fell by 18.7% from $65,688 in August 2022 to $53,376 in August 2023. These prices can go even lower when state and federal incentives for EV purchases are accounted for.
Data from Cox Automotive shows that price cuts by American EV maker Tesla caused electric vehicle prices across the board to experience a sharp fall month-over-month and year-over-year. On top of established automakers such as Ford and General Motors as well as EV startups such as Rivian and Lucid Motors in the U.S., China is also home to an estimated 835 EV startups that are striving to make a mark on the global EV market.
With this much product leaving electric vehicle manufacturing lines across the globe, vehicle dealers are predicting reduced EV sales in the short-term due to oversupply. Many dealers across the country have unsold electric cars collecting dust in their lots, a Cox Automotive report revealed, with carmakers such as Hyundai, General Motors, Toyota and Ford reporting they have more than 90 days’ worth of unsold electric vehicles at some locations.
Furthermore, data shows that U.S. car dealers have approximately 92,000 new electric cars in stock, more than three times the stock of EVs that dealers had on their lots a year ago. These figures indicate that even though electric vehicle sales have spiked in recent months, the industry’s growth may be short lived.
Automakers are increasingly electrifying their vehicle lines but aren’t selling these EV units in great numbers. A Reuters report stated that General Motors has 50 days’ worth of the Cadillac Lyriq at dealerships, and more than 80% of manufactured GMC Hummer EVs and Lyriqs are in transit to car dealerships.
The growing inventory of EVs at dealers’ lots means that all players in the industry, such as Fisker Inc. (NYSE: FSR), need to find innovative ways to boost sales without having a major impact on their bottom lines.
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