It’s never been cheaper to buy an EV. Here’s why.
It’s never been cheaper to buy an EV. Here’s why.
New electric car prices dropped $2,000 in the U.S. last month, bringing EVs close to price parity with gas-powered cars.
By Nicolás Rivero March 18, 2024 washingtonpost.com
The price of electric cars is plummeting so fast that they’re now almost as cheap as gas-powered cars.
Since EVs first hit the market, car buyers have had to pay a steep premium if they wanted a car that ran on batteries instead of a gas engine. Two years ago, they would have paid about $17,000 more on average for a new electric car than for a new gas-powered car. But that gap has been rapidly closing, shrinking to $5,000 last month, according to data from Cox Automotive.
That’s an 11 percent markup over the average new car price last month — roughly similar to the price difference between picking the base model of some cars vs. the performance model that comes with all the bells and whistles.
Tesla is setting electric vehicle prices so low, they’re almost even with gas-powered cars.
Of course, part of the reason EV prices are plunging is that consumers are not buying them as fast as dealers and automakers expected. As the industry moves beyond enthusiastic early adopters, it now faces car buyers who are concerned about charging infrastructure and high upfront costs.
So car dealerships are discounting electric cars on their lots. Average EV prices dropped $2,000 last month. “We’re going to continue to see price cuts or discounts just because there’s inventory and [dealers are] really trying to get these sold,” said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive.
That’s good news for Americans in the market for a new car who might be considering going electric. “Price is always one of the top barriers for adoption, so I think getting down to price parity is key,” she said.
Which EVs are getting cheaper?
Tesla, which sells more electric cars in the U.S. than all other automakers combined, has been the driving force behind the EV price plunge. The automaker started slashing the price for its popular Model Y SUV and Model 3 sedan in January 2023, dragging down the average for all electric cars. For instance, the base Model 3 sedan, which cost $47,000 at the beginning of 2023, now sells for $39,000. The premium Model Y dropped from $70,000 to $52,500 in that same period.
Tesla is probably cutting prices to maintain its market share as rival automakers start selling electric cars, Valdez Streaty said. There are now 57 EV models for sale in the U.S., according to Car and Driver magazine. While Tesla once commanded roughly 80 percent of the U.S. market, it’s now clinging to a bare majority — and most of its top competitors are also cutting prices.
“Tesla still dominates, but … there’s so much more competition now,” Valdez Streaty said.
EV prices are set to keep dropping
Last month’s drop in EV prices is part of a long-term trend toward cheaper electric cars, mainly due to falling battery prices. Batteries are nearly 90 percent cheaper today than they were in 2008, according to the U.S. Energy Department.
“Batteries can make up as much as 40 percent of the cost of the vehicle,” Valdez Streaty said. “We’re going to see battery prices continue to drop … so I think we’re going to start to see this closing near that price parity.”
The cost to make a new electric car could fall to the same level as gas-powered ones as soon as 2027 because of more efficient manufacturing, according to a March 7 report from the technology consulting firm Gartner.
Cost is the main barrier for U.S. car buyers thinking of making the switch, according to a 2022 Cox Automotive survey. If prices keep dropping as they did last month, more Americans may be willing to ditch their gas-guzzlers for electric cars.
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Replies to This Discussion
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Permalink Reply by Skip Peel - Mineral Consultant on
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It's not about buying an EV, Steve. It's what "price parity" could mean for ICE vehicles and oil demand. As oil demand goes down and major operators curtail production to support the price, associated natural gas from oil wells goes down also. Less associated gas helps support gas focused basins like the Haynesville. It will take some improvements in EV battery technology and a much larger charging network before gasoline demand goes down but those developments will happen and likely happen in the next couple of years. Anyone who has driven and maintained an EV will tell you that once range anxiety is reduced and price parity is reached, it's no contest. EV's are incredible. Better performance, lower costs to own and operate.
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Permalink Reply by William Arnold on -
When better battery technology is available with longer mileage, longer life, and shorter charging times, then maybe. But charging stations have to be there to make out of town trips reasonable.
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Permalink Reply by Skip Peel - Mineral Consultant on
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William, all of those improvements are on the way and should be available in EVs in the next couple of years. As to charging stations:
Thursday, January 11, 2024
The Biden-Harris Administration today announced $623 million in grants to help build out an electric vehicle (EV) charging network across the U.S., which will create American jobs and ensure more drivers can charge their electric vehicles where they live, work, and shop. This is a critical part of the Biden Administration’s goal of building out a convenient, affordable, reliable and made-in-America national network of EV chargers, including at least 500,000 publicly available chargers by 2030 ensuring that EVs are made in America with American workers.
A number of private companies are building charging stations
Dec 15, 2023.
Can you make money owning an EV charging station?
Are EV charging stations profitable? Yes, they can definitely be profitable. EV charging is a service drivers are willing to pay for, especially if it is fast charging. Of course, how profitable it is, depends on the specifics of your situation, location, and business.
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Permalink Reply by Skip Peel - Mineral Consultant on
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Here is a snapshot of what is coming in the expansion of EV charging stations.
General Motors Doubles Down on Commitment to a Unified Charging Standard and Expands Charging Access to Tesla Supercharger Network
- GM will begin to integrate the North American Charging Standard (NACS) in new EVs starting in 2025
- GM customers will be able to access 12,000 Tesla Superchargers and growing beginning in early 2024
- Builds on progress made to-date through the Ultium Charge 360 initiative to expand access for residential, work and public charging
GM and Ford EV owners to get Tesla Supercharger access as soon as February
Dec 18 2023
Hundreds of thousands of places to charge
One account to access them in North America and Europe.
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Permalink Reply by Skip Peel - Mineral Consultant on
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British Petroleum (BP) has unveiled a new electric vehicle charging site at its American headquarters in Houston, Texas. The inaugural ceremony for this space, termed the Gigahub, is scheduled for March 20, 2024. The BP pulse station at this location is the first of its kind under the BP pulse brand operating in the US, and it opens its doors to the public from April 2 onwards. The Gigahub will house 24 high-speed EV charging points.BP Pulse represents the branch of BP that specializes in electric vehicle charging. Having established a network of 29,000 EV charging points worldwide, BP aims to more than triple this number to overreach an ambitious target of 100,000 charging points around the globe by the year 2030.The material has been provided by InstaForex Company – www.instaforex.com
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Permalink Reply by Steve H on
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I don’t think there’s a lot of people that really want to drive a EV. Hence cutbacks on production cause people just are not buying them like projected. Nobody wants to be told that have to drive a EV either. I personally do not care for them. If people wanna drive them go for it. I would rather it be by choice.
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Permalink Reply by Skip Peel - Mineral Consultant on
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No one will be told or forced to buy an EV. I'm hearing some of that rumble and it's not factual. Mostly partisan political spin. The average auto buyer will end up with an EV at some point in time simply because it makes sense. When that happens, there will still be ICE vehicles for those that prefer them for whatever reason.
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Permalink Reply by Steve H on
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Wrong skip. The federal govt will absolutely make it to where we have no choice as they do with most things. The average buyer will end up with a EV cause it makes sense LOL. To who ? Don’t answer that it I dont need a copy and paste excerpt on partisan politics about EVs when I open my eyes and see what’s happening in the world everyday. This is not why I come to this site. It’s to research and learn about what’s going on with the Haynesville shale. It really hasn’t been that in a long time. Cause you personally push unicorn farts and pixie dust Or whatever liberal agenda may be for the week.
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Permalink Reply by Skip Peel - Mineral Consultant on
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I see both sides of the issue but then again I'm not a climate change denier. I think it is fair to state that up front. It informs my personal opinion and the advice I offer to my clients that pay me for it and what I offer pro bono here. I post articles to help members think through the issues that I think are important for anyone who has minerals to manage. They can agree with you that it is pixie dust or they can think through what could happen if certain scenarios play out. It is easy to state that EVs have challenges now - but what about next year or the year after? The arc of EV evolution is fast moving and improvements in technology occur weekly. Timing is an opinion but the end result is not.
There are lots of good articles on the subject right now that are easy to find and that cover both sides of the issue. For those who are interested, here is one that came through my news feed today.
The roadblocks to Biden’s E.V. plan
By David Gelles NYT
The Biden administration rolled out new rules on Wednesday designed to thrust the United States — the greatest car culture the world has ever known — into the era of electric vehicles.
With new tailpipe pollution limits from the Environmental Protection Agency, automakers will effectively be forced to make a majority of new passenger cars and light trucks sold in the United States all-electric or hybrids by 2032. To meet the new standards, 56 percent of new cars sold by 2032 would be zero-emissions and another 16 percent would be hybrid, according to the E.P.A.’s analysis.
E.V.s account for only 7.6 percent of new car sales today, so the targets represent an ambitious attempt to overhaul one of the country’s biggest industries in a remarkably short amount of time.
A successful phaseout of gas-powered cars and trucks would also make a big dent in the fight against climate change; cars and other forms of transportation are the biggest source of planet warming emissions generated by the United States.
But there are plenty of things that could derail the White House plan.
Politics
Electric vehicles are now squarely a part of the culture wars. A Gallup poll found that 71 percent of Republicans would not buy an E.V., compared with 17 percent of Democrats.
Former President Donald Trump has used increasingly brutal language about electric vehicles and their effect on the American economy, claiming they will “kill” America’s auto industry and calling E.V.s an “assassination” of jobs. It is a virtual certainty that he will continue that theme in his presidential campaign.
Speaker Mike Johnson called the rule part of President Biden’s “crusade against American energy and gas-powered vehicles,” saying it would limit consumer choices, raise costs for consumers and increase American dependence on China.
Lobbying and lawsuits
The fossil fuel industry is also pushing back against the new E.P.A. rule.
American Fuel & Petrochemical Manufacturers, a lobbying group, has started a large ad campaign to politicize what it falsely calls “Biden’s E.P.A. car ban” in swing states.
And a coalition of fossil fuel companies and Republican attorneys is expected to sue to block the rule. Those challenges could wind up at the Supreme Court, which in recent years has issued several rulings curtailing the E.P.A.’s authority.
Auto dealers
America’s car dealers are a major obstacle to the transition to E.V.s. At one point last year, two-thirds of U.S. dealerships did not have a single E.V. for sale, according to a Sierra Club report. And about half of dealers said they wouldn’t offer an E.V. even if they could.
There are several reasons for dealers’ resistance. The profit margins for E.V.s. are generally smaller than for gas-powered cars, and selling them requires infrastructure investments. Perhaps more important, dealerships make nearly half of their profits by servicing cars. Electric vehicles have fewer parts, require far fewer trips to the service department and are cheaper to maintain than gas-powered cars and trucks.
And dealers are politically influential, with donations that are heavily tilted toward the Republican Party. In many states, they are protected by legislation that bans carmakers like Tesla from selling to consumers directly.
Tepid demand
Early adopters drove the surge in sales of Teslas and other all-electric hits such as the Ford Mustang Mach-E. But demand has slowed in recent months. Ford said in December that it would cut production of its highly touted F-150 Lightning pickup — the electric version of the best-selling vehicle line in America — by half.
E.V.s are still the fastest-growing segment of the American car market, but many consumers remain reluctant to walk away from their gas guzzlers. Electric vehicles generally remain more expensive than their conventional counterparts, and there are fewer models to choose from, as well as fewer S.U.V.s and pickup trucks, the most popular categories in the country.
Prices could eventually fall, especially if China’s new generation of inexpensive E.V.s makes it to the United States. But given the Biden administration’s increased scrutiny of Chinese E.V. imports, that currently seems unlikely.
Charging infrastructure
American drivers, especially those in rural areas, have concerns about the range of E.V.s. And charging an E.V. outside major cities can still be a big challenge, as I found out during an ill-fated reporting trip last year.
Not all E.V.s can power up at all E.V. chargers, it can take hours to refill a battery, and chargers remain few and far between in huge parts of this vast country. For anyone without a charger at home, or anyone planning a trip of more than a few hundred miles, charging is a major issue.
The federal government was supposed to help with this. In 2021, Congress allocated $7.5 billion to build tens of thousands of E.V. chargers around the country. But as of December, not one had been installed.
Why the new standards might work
Despite the many obstacles, there is also reason to believe the E.P.A. rule might just work — or at least make a big difference.
Carmakers have been slow to introduce new E.V. models, but a wave of cheaper, better-performing electric vehicles is expected to come to market in the next few years. Charging infrastructure is being standardized, and car companies are investing their own money in building out a better network.
And while the E.P.A. rule is likely to face legal challenges — and Trump has pledged to “terminate” the Biden administration’s climate rules if he is re-elected — it cannot be easily overturned.
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Permalink Reply by Steve H on
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I am without a doubt a climate change denier. There’s simply not enough raw data there to convince me otherwise. How would anyone believe anything the media would say these days especially after Covid lol. NYT is a joke along with foxnews pretty much all of them have their own agenda. Mainly for political reasons. Skip you seem like an intelligent individual. You can absolutely post whatever you believe in cause it’s in our 1st amendment rights to do so. Doesn’t mean I will EVER agree and totally think you are going down the wrong path. It’s your opinion to do so. But I believe there’s a lot of people on this site that would rather hear more about land related, production, drilling, or completion agendas vs what it is now.
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