Tesla has cut prices very aggressively here in Australia [1] such that the "driveaway" prices for the Model 3 and Y are now ~AU$60k (or $US40k). There aren't a lot of government subsidies to buy EVs in Australia so that's what most Telsa buyers will pay, but those prices are very competitive given that many popular ICE SUVs now cost AU$50k+.
Not suddenly, it's been widely predicted for this to happen. It's only sudden if you weren't paying attention.
If you are, this is right on schedule. There are more price reductions coming as well. A lot more.
1) a lot of EVs are now being passed on to the second hand market. Most of those are in pretty good shape in terms of battery health, etc. But because there are so many, prices are trending down because they just aren't as scarce any more. And because there now is a second hand market, a lot of first time EV buyers are opting for that.
2) new EVs are getting cheaper to make. This is learning effects that come with scaling up production volumes as well as continued improvements in battery tech. This is not about giving people irrationally large ranges they don't need for their morning coffee run & commute but about getting them lighter, more affordable cars.
3) The high end of the market is getting saturated and more competitive. So, companies are lowering their prices accordingly to stay relevant. Especially those making EVs that weren't that competitive.
4) Additionally, they are now targeting lower price segments with new EVs. This was widely predicted to happen in the 2024-2026 time frame and it seems to indeed have started happening. Production volumes are still low though but growing rapidly. The Chinese are putting a lot of pressure on the market but that too is not unexpected. However inconvenient it may be for manufacturers still lacking good products.
5) Some companies won't make it. There are a few companies that are as of yet without products shipping in volume bleeding market share to an EV market that is rapidly growing. Some may pull some miracles, others will simply fail.
The next step that is playing out 2026-2030 is that of mass commoditization. EV production volumes will go up to cover most of the market and at price ranges where ICE cars simply stop making sense. Mostly those factories are already being built/planned. Investments are secured. This is basically happening.
Beyond that, most of the commercial market will be electric. No exceptions, really. Trucks, vans, lease cars, buses, everything. It will of course take some time for traffic on the roads to reflect that but those driving the most tend to drive newer vehicles and replace them when it's economical. With operational costs being less, that might come sooner rather than later for a lot of aging ICE vehicles.
The article doesn't mention another big factor: leasing. Due to how the tax credit works and also due to high residuals leasing an EV is a lot cheaper than buying or leasing an ICE vehicle in many cases. There are several EV's that can be leased for under $200/month, like the bz4x or the Kona.
I don't like leases, but if I was getting a new car now I'd probably lease. I have no idea what the resale price of an EV is going to be in 3-5 years, so if the dealership or manufacturer is willing to take that risk it might be worth it.
P.S. My $200/month doesn't include the down payment. The right way to compare is to amortize that down payment over the lease payments to get a fair comparison. But even doing that there are 2 under $250/month and 5 under $300/month: https://electrek.co/2024/05/28/five-evs-that-lease-for-under... And one of those 5 is the very highly reviewed Ioniq 6.
One thing to keep in mind is the difference between voluntary preference and necessity. Many Americans choose to gift thousands of dollars to car companies and dealers to buy high-margin SUVs and trucks, but anyone who couldn’t afford or didn’t want an expensive lifestyle accessory has cheap ICE options below anything in the EV space.
I’m really hoping that a return to historically normal loan rates leads more manufacturers to compete in that lower end space because there are a ton of people who live in car-dependent areas which are also often less healthy due to pollution. EVs still have tire particulate problems but losing the tailpipe and ground pollution from gas is a very nice immediate win to pair with the long-term benefits of warming the planet less.
I think this isn't surprising. The fundamentals of the making of electric cars are obvious: they should become cheaper. Currently their price is dominated by battery costs and the costs of ramping up the production, but both are destined to come down.
But overlaid on this natural "flow" are turbulences. Demand varies, at each new generation which is cheaper and better, demand usually takes a huge step up. Which temporarily lets prices stay constant or even raise for a bit. High prices cause large production increases which eventually will over saturate the market and force prices down which of course increases demand again.
But in the end happens, what has been predicted for 10 years, that electric cars become cheaper than cars with combustion engines.
Just did a carmax search in my area, which spans a pretty big, well populated, fairly high income region. Under $20K (what I consider to be "affordable"), under 40K miles, any model/brand.
3 EV, 1 hybrid, 8 "flex", 0 plug in hybrid. And 392 gas.
Readit News
[1] https://www.carexpert.com.au/car-news/tesla-model-y-model-3-...
If you are, this is right on schedule. There are more price reductions coming as well. A lot more.
1) a lot of EVs are now being passed on to the second hand market. Most of those are in pretty good shape in terms of battery health, etc. But because there are so many, prices are trending down because they just aren't as scarce any more. And because there now is a second hand market, a lot of first time EV buyers are opting for that.
2) new EVs are getting cheaper to make. This is learning effects that come with scaling up production volumes as well as continued improvements in battery tech. This is not about giving people irrationally large ranges they don't need for their morning coffee run & commute but about getting them lighter, more affordable cars.
3) The high end of the market is getting saturated and more competitive. So, companies are lowering their prices accordingly to stay relevant. Especially those making EVs that weren't that competitive.
4) Additionally, they are now targeting lower price segments with new EVs. This was widely predicted to happen in the 2024-2026 time frame and it seems to indeed have started happening. Production volumes are still low though but growing rapidly. The Chinese are putting a lot of pressure on the market but that too is not unexpected. However inconvenient it may be for manufacturers still lacking good products.
5) Some companies won't make it. There are a few companies that are as of yet without products shipping in volume bleeding market share to an EV market that is rapidly growing. Some may pull some miracles, others will simply fail.
The next step that is playing out 2026-2030 is that of mass commoditization. EV production volumes will go up to cover most of the market and at price ranges where ICE cars simply stop making sense. Mostly those factories are already being built/planned. Investments are secured. This is basically happening.
Beyond that, most of the commercial market will be electric. No exceptions, really. Trucks, vans, lease cars, buses, everything. It will of course take some time for traffic on the roads to reflect that but those driving the most tend to drive newer vehicles and replace them when it's economical. With operational costs being less, that might come sooner rather than later for a lot of aging ICE vehicles.
The article doesn't mention another big factor: leasing. Due to how the tax credit works and also due to high residuals leasing an EV is a lot cheaper than buying or leasing an ICE vehicle in many cases. There are several EV's that can be leased for under $200/month, like the bz4x or the Kona.
I don't like leases, but if I was getting a new car now I'd probably lease. I have no idea what the resale price of an EV is going to be in 3-5 years, so if the dealership or manufacturer is willing to take that risk it might be worth it.
P.S. My $200/month doesn't include the down payment. The right way to compare is to amortize that down payment over the lease payments to get a fair comparison. But even doing that there are 2 under $250/month and 5 under $300/month: https://electrek.co/2024/05/28/five-evs-that-lease-for-under... And one of those 5 is the very highly reviewed Ioniq 6.
So maybe by "EV are becoming affordable", it means that the rest of the market became expensive enough ?
I’m really hoping that a return to historically normal loan rates leads more manufacturers to compete in that lower end space because there are a ton of people who live in car-dependent areas which are also often less healthy due to pollution. EVs still have tire particulate problems but losing the tailpipe and ground pollution from gas is a very nice immediate win to pair with the long-term benefits of warming the planet less.
But overlaid on this natural "flow" are turbulences. Demand varies, at each new generation which is cheaper and better, demand usually takes a huge step up. Which temporarily lets prices stay constant or even raise for a bit. High prices cause large production increases which eventually will over saturate the market and force prices down which of course increases demand again.
But in the end happens, what has been predicted for 10 years, that electric cars become cheaper than cars with combustion engines.
3 EV, 1 hybrid, 8 "flex", 0 plug in hybrid. And 392 gas.
Where are these supposed cheap EVs?