• A Kelley Blue Book report that tracks average sale prices of each car manufacturer has noted that the average transaction price of an EV has dropped a whopping 20% over the last 12 months.
• The inflation-defying figure is in part due to the several price cuts Tesla have implemented over the past year.
• With other OEMs also cutting prices and Chinese EV manufacturers offering cars even cheaper, can manufacturers afford to go deeper?

THE AVERAGE PRICE OF AN ELECTRIC VEHICLE IS GETTING CHEAPER

A new report from Kelley Blue Book, which looks at the average transaction price (ATP) for new vehicles within the USA, has noted that the ATP of electric vehicles has dropped significantly since this time last year.

For July 2023, the ATP of an electric car was $53,469. This compares to around $65,108 in July 2022, a decrease of around 18%. This significant drop can largely be attributed to a multitude of price reductions that Tesla has announced in recent times. When it comes to the ATP for Teslas specifically, it has dropped from $62,000 in January to $54,660 in July.

Additionally, Tesla previously hinted that it will not hesitate to reduce prices even further in the future to gain market share. Other manufacturers are also contributing to this drop, with Ford slashing nearly $10,000 off the cheapest F-150 Lightning.

Just last week, Lucid also cut the price of its Lucid Air models by up to $12,000. Likely in response, Tesla announced cheaper Model S and X models that are also around $10,000 less, but unlike previous price drops from the company, these new models sacrifice range for their cheaper price tags. It looks like for Tesla at least, that strategy might be paying off for now, as the report also noted that Tesla sold a record 59,813 cars in the month of July within the US.

EFFECTS ON USED EVS

This news further confirms that second-hand electric cars will be easier and cheaper to come by, as record numbers of EVs continue to be sold. That is true outside the US, too, with used EV prices dropping in the UK in response to price cuts, reducing the barriers to entry for new EV drivers.