EV prices are falling, but remain out of reach for many potential buyers
It isn’t often that we get to report that a consumer product just got 10 grand cheaper, but today, Ford Motor Company announced it’s cutting $10,000 off the price of its F-150 Lightning electric pickup.
It’s the latest price cut in the electric vehicle space after Tesla started the trend earlier this year — a move that helped the automaker sell close to half a million vehicles in April, May and June.
But a report last week by Cox Automotive — which is a Marketplace underwriter — showed that while consumers bought a record number of EVs in the second quarter, sales are no longer increasing at quite the same clip they have over the last few years.
Between the chip shortage and supply chain issues during the pandemic — and soaring demand for EVs — for the past couple years, it was pretty hard to find them on dealers’ lots, said Gil Tal, the director of the Electric Vehicle Research Center at UC Davis.
“The inventories were close to zero for a very long time,” Tal said.
That’s changed. Cox reports dealers now have pretty good inventories of EVs. That may be because the market is no longer in its initial boom phase. And yet, it’s still catering to higher-end buyers who fueled that boom, said Jessica Caldwell, an analyst at Edmunds.
“So there’s only just a limited number of people who can afford those type of cars,” Caldwell said.
Right now, EVs make up about 7% of new vehicle sales. To get to the Biden Administration’s goal of 50% by 2030, prices will have to come down, Caldwell said. “It really is the $30,000, $40,000 vehicles that are going to move the needle.”
But to get to those prices, automakers will have to cut production costs.
K. Venkatesh Prasad at the Center for Automotive Research says they could do that by forming partnerships to build batteries and other components.
“It’s either that or they continue to have a growing heap of products on the lot,” Prasad said.
But we’re not there yet, said Tal.
“There is a big difference between having an inventory and having like, you know, fire sales and putting all the balloons out because you cannot sell them,” he remarked.
But if inventory gets too big … then you might start to see balloons and fire sales.