Electric cars, once a pricey choice for the environmentally conscious, are becoming more accessible. Recent data shows a significant 25% drop in the average electric car price in the US over the past year, falling from $67,000 to $50,000, and this downward trend is likely to continue as battery tech advances, more mainstream models arrive, and automakers fiercely compete.
What are the factors behind this price drop, and how will it affect the consumers and the industry? In this article, we will explore the reasons and implications of the falling electric car prices, and what you need to know before you buy one.
Tesla’s Price Cuts
One of the main drivers of the price drop is Tesla, the leading electric car maker in the US. Tesla has been slashing the prices of its models, such as the Model 3, Model S, and Model Y, in order to boost sales and market share. According to savagegeese, a car reviewer and critic, Tesla’s strategy is to ‘flood the market with cheap EVs and force other manufacturers to lower their prices or lose customers.’
Tesla’s price cuts have also been influenced by the expiration of the federal tax credit for electric car buyers, which was phased out for Tesla vehicles in 2019. The tax credit, which offered up to $7,500 in savings, was a major incentive for consumers to buy electric cars. Without it, Tesla had to lower its prices to remain competitive and attractive.
Battery Advancements
A key driver behind these decreasing prices is the remarkable progress in battery technology, the most critical and costly part of an EV. Battery costs have seen a dramatic decrease of 89% since 2010, from $1,100 per kilowatt-hour to just $137 in 2020, with projections suggesting they’ll dip below the $100 mark by 2023, potentially making EVs cheaper than gasoline cars.
Battery advancements also mean that electric cars can offer longer range, faster charging, and better performance, which are some of the main concerns for potential buyers. For example, the Tesla Model 3 can travel up to 353 miles on a single charge, and can be recharged in as little as 15 minutes at a Supercharger station. These features make electric cars more convenient and appealing to consumers, who may have been deterred by the ‘range anxiety’ and ‘charging hassle’ of the past.
Mass Market Models
A third factor that influences the price drop is the availability of mass market models, which are designed to appeal to the average consumer with affordable prices and practical features. These models are different from the luxury and niche models that dominated the electric car market in the past, such as the Tesla Model S and the Chevrolet Bolt. Mass market models aim to offer a similar or better driving experience than gasoline cars, without compromising on quality or comfort.
We’re seeing more affordable options like the Tesla Model 3 starting at $37,990, the Hyundai Kona Electric at $37,190, and the Ford Mustang Mach-E at $42,895, which offer performance and features that rival or even surpass their gasoline counterparts, catering to a wide range of driver preferences.
Market Competition
The growing popularity of electric cars has spurred intense competition among both established and new automakers, leading to an influx of new models and expanded lineups, ultimately benefiting consumers with more choices and competitive pricing.
Some of the automakers that are competing in the electric car market are Volkswagen, which plans to launch 70 electric models by 2030, General Motors, which plans to offer 30 electric models by 2025, and Toyota, which plans to introduce 15 electric models by 2025. These automakers are investing billions of dollars in research and development, production, and marketing, to catch up with or surpass Tesla, which still holds the largest market share in the US. They are also collaborating with each other, or with tech companies, to leverage their strengths and resources.
What It Means for You
These falling prices have major implications for anyone considering an electric vehicle. Let’s explore the exciting benefits and potential challenges you might encounter as EVs become more budget-friendly:
Benefits:
Save money on the upfront cost of buying an electric car, as well as on the maintenance and fuel costs over time. Electric cars have fewer moving parts and require less service than gasoline cars, and electricity is cheaper and cleaner than gasoline. According to CarEdge, the average annual savings for owning an electric car over a gasoline car is $632.
Experience a superior driving journey with an electric car, boasting smoother acceleration, a hushed ride, and more agile handling than conventional cars, complemented by cutting-edge features like regenerative braking and wireless charging for enhanced convenience.
Make a positive impact on the planet and your community by choosing an electric car, as they significantly reduce harmful emissions and noise pollution compared to gasoline vehicles, while also supporting the shift towards cleaner, more sustainable energy sources like solar and wind.
Challenges:
You might encounter some hurdles with charging infrastructure, its availability, and compatibility, depending on your location and travel habits; while the charging network is growing, it’s not yet as ubiquitous as gas stations, and you might face compatibility issues with different charging standards.
Navigating the uncertainties around battery longevity, warranty terms, and resale value is also something to consider, as EV technology is still evolving; while batteries are becoming more robust, they do degrade over time, and warranty coverage and resale value can be variable.
With electric car prices on the decline due to factors like Tesla’s price adjustments, battery innovations, the rise of mass-market models, and fierce market competition, understanding the pros and cons is crucial. EVs offer compelling advantages in cost, performance, and environmental benefits, but it’s essential to be aware of potential charging inconveniences, battery considerations, and resale value uncertainties before making your switch.
