EV Price Wars: Industry Discounts Surge as Average Prices Dip Below Tesla

Prices for electric vehicles have seen a decrease recently, dipping below those of Tesla, as the market responds to Tesla's earlier price reductions, according to information from Cox Automotive shared by Automotive News.

In April, the typical price for an electric vehicle (EV) from various manufacturers, Tesla included, was $55,235, which is $433 cheaper than the average price of a Tesla. According to Automotive News, this is the initial instance since February 2023 where the general market's average EV price has dipped under Tesla's. By May, this gap widened, with the average EV price in the market being $56,648, which is $721 lower than Tesla's average.

Upcoming 2024 version of the Tesla Model Y, presented by Tesla, Incorporated.

Throughout the last twelve months, Tesla has repeatedly reduced its prices, and it seems that other car manufacturers are starting to do the same. In May, the average markdown on electric vehicles was 12.4% off the standard selling price, which is almost six percentage points above the normal rate across the car industry, as per data from Cox.

Cox Automotive observed fluctuations in electric vehicle (EV) pricing during the last half-year. The prices hovered near $57,000 from December through February, dipped to $53,000 by March, and by May, they rebounded close to their December levels. However, the price difference with Tesla vanished within this period. Back in December, the average cost of an EV exceeded Tesla's average price by $7,276, based on data from Cox.

2024 Model of Hyundai Ioniq 5

Price reductions might be seen as accepting the true state of affairs. A J.D. Power report from May suggests that worries about the high prices of electric vehicles are a major factor in declining interest from potential buyers. The limited range of low-cost electric vehicles and the reduced access to the $7,500 federal tax credit for electric vehicles, owing to new regulations introduced at the start of the year, have exacerbated the situation.

Cox observed a significant 84% increase in the sales of pre-owned electric vehicles in May. Contributing to this boost is the declining difference in cost between used electric vehicles and their gasoline counterparts, which decreased to $1,100 in the week of May 6. Earlier in the month, iSeeCars conducted a study on the advertised sale prices of second-hand vehicles and found that the prices of used electric vehicles were in fact lower than those of traditional gasoline vehicles. This drop in prices for pre-owned electric vehicles may also lead to car manufacturers reducing the prices of their new electric vehicle offerings.

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