Electric cars are becoming more expensive, not less expensive

Electric cars are becoming more expensive, not less expensive

A few years ago, the industry story was that all electric cars would reach financial equity with their combustion counterparts by 2025. The assumption was that this would happen gradually by increasing battery production and taking advantage of standard economy. However, the reality has been different as the world now faces higher prices across the board. The increase from manufacturers and retailers pushed the average bill for electric vehicles to $ 54,000, approximately $ 10,000 more than the average purchase price for electric vehicles, according to JD Power.

With economic pressures increasing the value of all cars, almost nothing leaves the ballot for less than it would have been in 2020. But the apparent increase in power structures actually exceeds the structures we were told should replace.

Developers cite inflation as the main culprit. But material shortages have also played a major role, as it becomes increasingly difficult to obtain raw materials for battery manufacturing. Developers have spent the last few years trying to improve their own devices and / or promote stronger relationships with affected vendors. But it was already difficult to meet demand before the closure of the relationship and the crisis disrupted supply chains. Today, the industry finds itself in a situation where nations are becoming more aware of the areas where exports are increasing, supplies are becoming more difficult and inflationary pressures are rising.

According Wall Street Journal, has brought good storms to the industry, and companies are doing everything they can to continue. Unfortunately, speeding means speeding up investment plans that were previously considered somewhat risky and increasing prices in an attempt to outperform inflation.

Yes WSJ:

Last week, GM added $ 6,250 to the price of GMC Hummer electric pickup models, which now range from about $ 85,000 to $ 105,000, citing an increase in product and equipment costs. The waiting list for the recently released truck is about two years old, a GM spokesman said.

This year, Tesla has tripled the price of its best-selling version of the Model Y SUV, adding a total of around 9. [percent] at the price of stickers, which are now $ 69,900, according to the Bernstein Study.

In total, the average price paid for an electric car in the United States in May increased by 22 [percent] from one year earlier, about $ 54,000, according to JD Power. In comparison, the average price paid for an internal combustion vehicle has increased by 14 [percent] during this period, around $ 44,400.

The companies say they are trying to cope with the recent rise in prices for raw materials that go into batteries to turn on electric vehicles, which are part of the most expensive EV. Prices for lithium, nickel and cobalt have almost doubled since the start of the Covid-19 epidemic, according to AlixPartners LLP consultant.

Last week, Ford Chief Financial Officer John Lawler said the use of a product that has never been witnessed in electric cars has erased Mach-E’s profit margins. It raised prices in response and also revised its electric car rental strategy to ban purchases in the United States, allowing it to process more batteries. But it really is an easy way for brands to put the most expensive feature on electric cars, sell customers at their next rental, and prevent anyone from getting a good deal for the product. excluding rent during inflation. Toyota and other automakers have come up with similar ideas, often referring to them as “closed battery ecological systems.” They do not always work in the same way (despite the similar language). But the main goal remains the same: keep the gear as close as you can to yet tell the public that it is for the benefit of the environment.

Insidious or not, the industry has little choice. If car manufacturers want to continue selling cars in places such as China or the European Union, they will have to start obeying strict air pollution laws. You are invited to discuss whether these principles are the result of the influence of large, established companies to make life more difficult for small car manufacturers, players who want to provide direct control over the market using ESG symbols and false positives, or key actions. to ensure the well-being of the planet. But that will still not change the realities of today’s market. Laws have been put in place, investments have been made and cars are now here, with little room for value for a troubled economy.

The proposed solution for the industry has been to reach an agreement with the material manufacturers. Although this poses a risk for car manufacturers to expand into commercial areas that they previously ignored, regulators say it is the only way to ensure they can continue to manufacture batteries at the speed required to eventually connect electric vehicles.

Fortunately for developers automatically, demand is still relatively high throughout. Much of this is due to declining production over many years – something that at least to some extent is their fault – and persistent noise to electric vehicles. The cars themselves have also been improved over time, with regular car manufacturers moving from small electric cars to models based on consumer tastes. This again casts doubt on the argument that it is about reducing productivity. But it helped improve indigenous standards, revitalized billions of development spending, and ultimately gave Tesla some fair competition.

However, the price of electric cars has not increased for all models. Older models can still be found at the same price as before and GM has even cut a few thousand dollars from the top of the Chevrolet Bolt, which is no longer eligible for a full $ 7,500 tax credit. for electric cars since the company has reached its goal. bias. Although it should also be noted that the car has already become a topic of high safety reminder about faulty battery cells.

Speaking of electric car tax credit, many manufacturers (excluding Tesla, ironically) have called on the United States to renew or extend the original plan as more car manufacturers reach their potential. . The Biden administration has also been pushing for this, but it has gotten into trouble suggesting that additional financial incentives may be associated with union work. Studies have also shown that the public, while still showing interest in all electric vehicles, may not have had a good intention of such an incentive scheme after two years of massive public use. Although the industry believes that this could be the best way to prevent electric cars from appearing as isolated luxury cars or customers with extra zero in their bank accounts and low-income consumer routes. The expansion of the national charging network, which has also received financial support from Congress, is another part of this mystery.

[Image: Guteksk7/Shutterstock]

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