Our dealer-connected auto industry veteran of many years, Jo Borras, came across a big find this week. It’s a Cox auto industry update on new-vehicle average transaction prices. Most of it is just trends in the overall auto industry. However, they decided to slip in some big notes regarding electric vehicles at the end, and they buried a huge gem in the very last line!
Let’s start with the gem: the “EV premium” has dropped from more than 30% to less than 10%! EVs are getting competitive, quickly — and we’re on the verge of it getting serious!
“In recent months, price parity between EVs and ICE has almost seemed possible,” Stephanie Valdez-Streaty, director of Strategic Planning at Cox Automotive, said. “It is a complicated measure with plenty of variables, but newer products and higher discounts have brought down average EV prices, even before potential tax incentives. A year ago, the EV premium was more than 30%. Today, it’s less than 10%.”
We have written for years about how total cost of owner (TCO) can make electric cars just as cheap or cheaper than their fossil-powered siblings and cousins. And many people have bought their electric cars on that premise. But mass-market buyers don’t often do big spreadsheet analyses taking into account a dozen factors and making various assumptions. They mostly look at purchase price. And now the purchase price is getting similar enough that they can get to step two!
Of course, once you are seriously comparing vehicles, you can get into the matter of operational costs and talk about gas savings, lack of oil changes and emissions checks, etc. And that can be the deal clincher. “Not only are the vehicles similar in size and features, but this one will save you a lot of money!” It’s a great way to close a sale, and you don’t even need a spreadsheet — if the upfront starting price is the same or similar and the operational costs are significantly different, the math doesn’t even need to be done, it’s obvious that you’re going to save money.
“The average price paid for a new electric vehicle in November was $52,345, up from a revised $51,715 in October and supported by incentive levels well above the industry average,” Cox writes. “In November, EV incentives reached their highest point of 2023 at 8.9% of ATP. A year ago, EV incentives were less than 2% of ATP. Thanks in part to discounts and above-average inventory levels, EV transaction prices last month were only 8.5% higher than the industry average price of $48,247.” Where will we be in one year? And how long until EV selling prices are lower than non-EV selling prices?
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