The electric vehicle market in the US is facing a major challenge as sales slow down around the 100,000 unit/month mark, marking a significant deceleration after a period of rapid growth. What’s even more worrying is that the number of vehicles in inventory is increasing, and at the same time the selling price is decreasing. In October, the average price of a new electric vehicle was about $52,000, down from $65,000 the same period last year, according to information from Cox Automotive.
Demand for electric vehicles in the US is currently showing signs of being weaker than manufacturers’ expectations. Both Ford and General Motors have reduced investments in the sector, while Elon Musk, CEO of Tesla, announced in his October earnings report that the company would slow down. The same thing happened across the Atlantic when Volkswagen decided to pause plans to build a fourth battery factory.
One factor contributing to this difficult situation was raised by Elon Musk as the story of interest rates, and criticized that high interest rates increase the burden on consumers to pay more each month when buying a car. Although the US auto market is growing strongly, interest rates cannot be considered the main reason for the slowdown in electric vehicles.
Wealthy groups with a passion for technology are becoming important factors driving interest in electric vehicles. People are seeing diversity in the market, from those looking for lower and more attractive prices to those waiting for new models like Tesla’s Model 3 and the benefit of the $7,500 EV tax. provided by the government. While there are expectations that these moves could push the electric vehicle market to new heights next year, there are no guarantees.
The current biggest barrier to electric vehicles is price. A new survey by S&P Global Mobility shows that cost is the main factor causing consumers to hesitate before deciding to buy an electric vehicle. Faced with this challenge, manufacturers are making efforts to reduce production costs to reduce selling prices and attract customers. However, with the exception of Tesla and some Chinese companies, electric vehicle production has become extremely expensive today.
Both Ford, with its big losses from its Mustang Mach-E and F-150 Lightning portfolio, and Renault, with its pledge to reduce production costs for electric vehicles by 40% over the next four or five years, are finding that delivering on their commitment This conclusion is not an easy one.
Even Tesla, with its reputation as one of the world’s leading electric vehicle manufacturers, is having difficulty bringing to market affordable electric vehicle models as Elon’s 17-year commitment has promised. Musk. Although many people desire to own a Tesla, the main barrier is their ability to pay.
Amid high interest rates and inflation, even though electric vehicle sales increase 36% in 2022, Tesla’s high prices risk reducing consumer demand. Tesla’s cheapest model, the Model 3 sedan, still costs $43,000, creating a challenge for a broad customer base.
The reality is that the market is witnessing a gap between the strong development of the US auto market and the difficult situation of electric vehicles. But with every passing minute, the shortage of low-cost cars only increases the pressure on Tesla in an extremely competitive environment. A company that once had a capitalization of more than $1,000 billion is now facing the challenge of delays and becoming a “ticking bomb” that can shake the entire industry.
Sourcing in China could be a cost-saving option for automakers, but the cost of metal-rich batteries and electric motors remains a challenge, especially for vehicles. Heavy-duty sport utility vehicles and pickup trucks. This is pushing manufacturers to develop lighter, cheaper and more efficient vehicle models.
Perhaps the decrease in gasoline prices and the reduction of pressure from increased gasoline prices have changed the trend. Many car manufacturers have reduced prices, but it seems this policy is not really effective. Electric cars currently take longer to sell than gasoline cars, and the problem of charging infrastructure is also one of the major barriers, making consumers hesitant in deciding to choose electric cars.
In general, the difficult context of the electric vehicle market in the US requires the intervention and creativity of manufacturers to reduce costs, reduce selling prices and create vehicle models that have great appeal to many people. customer object type. This challenge is not just for one company, but for the entire auto industry, and requires innovative solutions to overcome.
