With demand for electric vehicles reaching record lows in recent months, an increasing number of automakers are slashing their battery electric vehicle (BEV) prices in an attempt to woo unwilling customers. As a result, nearly 8 in every 10 newly minted electric cars have been sold at some kind of discount amid dwindling consumer demand.
Data from Auto Trader shows that 77% of new electric cars listed on the platform were discounted down from last month’s prices and up to 55% are now cheaper than they were a year prior. Automakers are also offering higher and higher discounts for electric cars, and the average reduction rate currently stands at a record 11%.
Electric vehicle demand has taken a significant plunge since late 2023 due to one major reason; EVs are still too expensive for the average consumer. While the first wave of typically wealthy early adopters was enough to keep the nascent electric vehicle sector going for nearly a decade, most of these folks already own an electric car. Vehicle manufacturers such as Tesla are now struggling to attract the rest of the vehicle consumer market as their purchasing decisions are primarily based on affordability.
Rising interest rates across most countries have also increased the cost of debt and made it more expensive to procure loans. As a result, fewer drivers are willing to acquire an electric car using debt. This has left EV startups and automakers scrambling to attract clientele by slashing their prices. A vicious price discount war started by Tesla in China due to escalating competition also forced other automakers to cut prices as well and caused prices for both new and second-hand electric cars to fall across the board.
Tesla recently announced another round of price cuts in Europe, China and the United States after its sales numbers took a notable hit indicating the electric vehicle giant’s growing inability to attract customers willing to spend a premium on its offerings. The Texas-based automaker cut Model Y prices in China from $37,419 to $34,483, slashed base Model Y prices in the U.S. down to $42,990, and reduced the Model 3 rear wheel drive car’s cost in Germany $2,133 ($1,840) to $43,723.
Auto Trader notes that even though petrol- and diesel-powered cars have also seen an increase in discounts, likely a sign that the entire automobile industry is in turmoil, price cuts in the electric vehicle sector have been more severe. An estimated 31% of electric cars have seen their prices drop by at least one-tenth while only 24% of internal combustion engine (ICE) cars have seen similar discounts.
As things stand, various EV startups such as Rivian Automotive Inc. (NASDAQ: RIVN) across the board now have to work extra hard to stimulate demand for their models in order to remain profitable in the industry.
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