Electric Vehicle Sales Surge as Automakers Slash Prices to Attract Customers

Automakers are ramping up the production of electric cars and trucks, after facing difficulties in sourcing batteries and other parts in recent years. This year, more than 30 new electric vehicle models are set to hit showrooms. However, while the demand for electric vehicles is rising, it is not keeping up with the increasing supply. As a result, inventories of unsold electric vehicles are starting to accumulate. Research firm Cox Automotive found that there are now over 90,000 battery-powered cars and trucks sitting on dealer lots, four times the number from a year ago. These unsold vehicles would last 103 days at the current rate of sales, compared to 50 days for the industry as a whole.

To address this supply-demand imbalance, automakers are resorting to price reductions and incentives. Ford Motor, for instance, recently slashed the prices of its F-150 Lightning electric pickup trucks by up to $6,000. The company is also offering discounted interest rates for certain loans used to purchase the Lightning. This follows a series of price cuts by Tesla, the dominant electric car seller, which prompted Ford to lower prices of its Mustang Mach-E electric SUV. However, these efforts have not yet narrowed the gap between inventory and sales for Ford’s Mach-E.

One key factor hindering electric vehicle sales is the high prices of these cars compared to their gasoline counterparts. Many consumers are waiting for electric vehicles to become more affordable and match the prices of traditional vehicles. Concerns about the range of electric vehicles and the availability of charging infrastructure are also deterrents for some potential buyers. Glenn Staub, a personal trainer from New York, expressed interest in purchasing an electric vehicle due to its environmental benefits and fuel cost savings. However, he plans to wait until his current vehicle is no longer serviceable.

Sales of high-priced luxury electric vehicles have been particularly slow. Tesla, Mercedes-Benz, BMW, Porsche, and Lucid Motors offer an abundance of options in this segment, with prices typically ranging from $75,000 to $160,000. The allure of electric vehicles has diminished for some customers as they realize the premium price tag associated with these models. Rick Ricart, president of Ricart Automotive, observed a pullback in demand for electric vehicles, including an unsold top-of-the-line F-150 Lightning truck that had been on sale for over two months.

Another challenge for electric vehicle sales stems from the expiration of the $7,500 federal tax credit under President Biden’s climate change law. This credit is only available for electric vehicles assembled in North America, meeting specific battery material requirements. Sedans priced above $55,000 and S.U.V.s, pickup trucks, and vans above $80,000 no longer qualify for the credit. However, Ford’s Lightning trucks remain eligible for the tax credit, and the company plans to significantly increase production in the coming months.

To improve accessibility and reduce prices for customers, Ford recently decided to lower the prices of its F-150 Lightning lineup. Investors expressed concern about the potential impact on Ford’s profits, causing a 6 percent drop in the company’s stock price. The base model of the Lightning now starts at $49,995, a reduction of nearly $10,000. The extended-range battery model saw an $8,879 price cut, while the top-of-the-line Platinum extended-range model is now $6,079 cheaper than its previous price. With these price adjustments, most Lightning models now qualify for the $7,500 federal tax credit.

Despite the challenges faced by automakers due to oversupply and slow sales, the electric vehicle market continues to evolve and become more competitive. Tesla recently announced the start of production for its much-anticipated Cybertruck, and General Motors is expected to deliver an electric version of the Chevrolet Silverado truck soon. Ford aims to address the supply-demand gap by increasing production capacity at its Rouge Electric Vehicle Center near Detroit. By fall, the facility is projected to produce 150,000 F-150 Lightnings annually, triple its current capacity.

In summary, automakers are grappling with unsold inventories of electric vehicles as production outpaces demand. To attract more customers, price reductions and incentives are being offered. However, high prices compared to traditional vehicles and concerns about range and charging infrastructure persist as barriers to widespread electric vehicle adoption. As the market becomes more competitive, automakers are striving to improve accessibility and meet customers’ expectations by lowering prices and expanding production capacity.