Demand for electric vehicles is on the slide.
The Wall Street Journal reported that amid a decline in the sales of electric vehicles, manufacturers and sellers are resorting to price cuts and other incentives to help reduce the buildup of unsold cars.
“I think there was a miscalculation about demand and how much EVs would be coveted,” said Joseph Yoon, an Edmunds analyst.
Certain manufacturers, including Hyundai Motor and Ford Motor, are promoting cash-back offers that reach up to $7,500 for select vehicles. Ford also reduced the price of its Mustang Mach-E SUV.
Other companies have opted to offer generous leasing options, including cheaper installments and shorter lease lengths.
Tesla has also cut prices across its lineup, with starting prices on some models down by around a third.
Tesla Model 3 is now CHEAPER than a Toyota Prius.
Tesla has just lowered lease pricing for their Tesla Model 3 and Y models in the US.
The Tesla Model 3 is now $329 per month with $4,500 down, 36-month term, and 10,000 miles per year.
The Tesla Model Y is now $399 per month… pic.twitter.com/FkEUMU6xbz
— Farzad Mesbahi (@farzyness) October 12, 2023
In October, the electric vehicle startup Fisker announced a price reduction of $7,500 on its recently launched Ocean Extreme SUV in response to what the company described as “competitive realities.”
Industry experts say the price cuts are a reflection of people’s unwillingness to pay premium prices for electric vehicles.
In September, data from the automotive website Edmunds indicated that customers received an average discount of $2,000 and paid $930 less than the list price when purchasing an electric vehicle, which is a significant fall from the previous year where they typically paid an additional $1,500 above the asking price.
However, there are concerns that even though the fall in prices may increase demand, it will not result in long-term sustainability.
“Is it sustainable forever?” said Jeff Dyke, president of Sonic Automotive. “Absolutely not. They’re going to have to find a way to make these things cheaper.”
Last month, a report from the Texas Public Policy Foundation found that without generous subsidies, the true cost of fueling an electric vehicle amounts to $17.33 per gallon of gasoline.
The study from the Texas Public Policy Foundation (TPPF) found, for example, that the average 2021 electric vehicle “would cost $48,698 more to own over a 10-year period without $22 billion in government favors given to EV manufacturers and owners.” https://t.co/bu1hwp7Sma
— Bud Brigham (@bmbrigham) October 27, 2023
The study found that the only thing making electric vehicles cheaper to run than traditional gasoline cars is a “wide array of direct subsidies, regulatory credits, and subsidized infrastructure that contribute to the economic viability of EVs.”
“Adding the costs of the subsidies to the true cost of fueling an EV would equate to an EV owner paying $17.33 per gallon of gasoline,” the report stated. “And these estimates do not include the hundreds of billions more in subsidies in the Inflation Reduction Act.”
This article appeared originally on The Western Journal.