After prohibitively high prices have prevented most drivers from purchasing electric cars for several years, increased competition coupled with reduced demand is making electric cars more affordable. Electric cars have been out of the reach of most consumers for nearly a decade thanks to high prices, keeping a majority of drivers from buying EVs and lowering EV adoption rates.
Early adopters and high-earning individuals who love to have the latest technology already own electric vehicles, Edmunds consumer insights analyst Joseph Yoon says, and the time for capturing that specific market segment is long past. Carmakers that want to remain relevant in an increasingly competitive market are now turning their attention to average consumers who aren’t overly concerned with luxury or cutting-edge technology in their vehicles.
Data from Edmunds shows that hybrids are drawing much more consumer attention compared to battery electric vehicles (BEVs), often selling for prices higher than their sticker prices. Furthermore, while car dealerships across the country have reported a surplus of BEVs, hybrids are moving much faster.
Increased consumer demand for hybrids may be due to the fact that they don’t need charging stations, which allows drivers to bypass the typical pitfalls associated with electric vehicle charging. Tesla Inc. (NASDAQ: TSLA) was the first company to develop electric cars for the mass market, and it had a monopoly that allowed it to sell its electric cars at premium prices.
However, with numerous electric vehicle startups and established automakers flooding the nascent EV market with multitudes of different EV models, Tesla’s grip on the market is slipping. Consequently, the Texas-based company embarked on aggressive price cuts that saw it slash the prices of popular offerings such as the Model 3 and Model Y.
Spurred by Tesla’s price cuts, automakers across the world are also cutting electric vehicle prices to remain competitive. In China, currently the largest electric vehicle market on the globe, Tesla’s price cuts spurred a fierce discount war with Chinese carmakers such as BYD that even attracted the attention of Chinese authorities.
Edmunds estimates that the average EV sold for just $900 under its sticker price in September compared to September 2022 when EVs sold for around $1,500 over the sticker price. Customers also have access to discounts of more than $7,000 when they buy EVs such as the Volvo XC40 Recharge and the Audi E-Tron, Yoon explains.
While EVs with higher prices often attract larger discounts, “regular” electric cars such as the Volkswagen ID.4 and the Nissan Ariya are eligible for more than $2,000 in discounts. Coupled with government incentives and tax credits, many of these electric cars can cost the same or even slightly less than fossil-fuel-powered cars.
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