Tech Matters: Understanding the electric vehicle price drop (2024)

Last Friday, Tesla announced it was dropping $2,000 off the prices of three of its five models, the latest in a series of price cuts and underperforming sales. Also last week, its stock price fell to below $150 per share, wiping out gains made over the past year as analysts await Tesla’s earnings report scheduled for this week. The news is expected to be bad.

Tesla attributes the downturn to increasing competition, slowing sales growth for electric vehicles and that its earlier price cuts failed to attract more buyers. Still, Tesla remains the leader in EV sales in the U.S., holding 55% of the EV market in 2023.

Further, EV sales hit a record high last year with 1.2 million U.S. vehicle buyers, according to estimates from Kelley Blue Book, which translates to 7.6% of all vehicle sales. The Cox Automotive Economic and Industry Insights team forecasts that EVs’ share of the U.S. market in 2024 will reach 10%. “The EV market is growing but just not as fast,” they said in a report.

But Tesla’s price cuts are having a profound impact on the EV market, both new and used. In response to Tesla’s cuts, other automakers are reducing prices on their new electric vehicles to remain competitive. Profit margins are shrinking and some manufacturers are losing money on their EV sales. According to a Boston Consulting Group report from March, U.S. automakers lose roughly $6,000 on every $50,000 EV they sell in America. And some are losing much more: Earlier this year, Rivian revealed that it lost $33,000 on every truck sold. Yet, Rivian cut $3,100 off its all-electric R1T pickup and R1S SUV base models to keep pace with falling EV prices.

The bigger impact has hit the resale market. For Tesla, their cuts on new vehicles have caused an immediate and substantial drop in the resale values of used Teslas, which topped 32% year over year in February, EV research firm Recurrent reported. Overall, used EV prices have fallen 24% during the same period. “Tesla values are still dropping faster than the industry average and faster than many of their competitors, such as Ford, Nissan, Chevy, and VW,” the report revealed.

The price-cutting strategy is not working to clear inventory as Tesla thought it would. Further, it has caused consumers to rethink their decision to buy an electric vehicle. Once a company offers a discount on anything, you begin to question the value of the discounted item, and with EVs, resale value is an important consideration. But it’s not the only one.

EV buyers are learning it’s not so easy to live the EV lifestyle. While there are usually cost savings with charging compared to filling up your tank with gas, doing so isn’t as simple as a quick stop at the corner gas station. Home charging stations are the most convenient option but are expensive and require enough room in the garage — and most importantly, you have to remember to plug in your car regularly depending on how many miles you drive.

Public charging facilities are also an option but lag behind demand. The National Renewable Energy Laboratory, part of the U.S. Department of Energy, estimates that the U.S. will need 182,000 fast chargers for electric vehicles by 2030. There are currently fewer than 40,000, with about a quarter of those in California.

Utah, especially the Salt Lake Valley, is on the right track. Salt Lake City alone has 1,082 public charging stations, including 196 free stations and 173 DC fast chargers. The Utah Department of Transportation plans to add 15 new fast-charging station sites along major highways and interstates by the end of this year, doubling the state’s fast-charging capacity. Each site will have four fast chargers placed every 50 miles. But fast is a relative term — it takes about 30 minutes to charge enough to travel 100 miles on UDOT’s fast chargers. Rocky Mountain Power’s chargers are more powerful and will provide the same charge in just five minutes.

For those who have the budget to install a charger in their garage, the cost ranges from $500 to $2,000 based on the type of charger, scope of installation and permitting fees if necessary. Level 2 charging stations, which use a 240-volt supply and are installed by an electrician, can provide an 80% charge in four to five hours at a rate of around 22.5 miles of range per hour.

The good news is you’ll pay less for an EV this year than last and a lot less if you buy a used EV. If you’re concerned about charging access, consider a hybrid vehicle — a good compromise between being energy friendly and practical.

Leslie Meredith has been writing about technology for more than a decade. As a mom of four, value, usefulness and online safety take priority. Have a question? Email Leslie at asklesliemeredith@gmail.com.

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