It comes as no surprise that the price of electric cars is rising. It seems the price of just about everything is rising, and ever since the COVID-19 pandemic, it also seems it's simply harder to get the things that we need and/or want, which leads to an increase in demand. As demand increases and materials are scarce or difficult to acquire, prices tend to rise.
According to a recent article published by Autoblog, the average price of a new electric vehicle spiked to $54,000 in May 2022, and buyers paid 22 percent more for a new EV year-over-year. Meanwhile, gas-powered car prices are up 14 percent, at an average of $44,400. The pricing information comes from a recent report by AlixPartners.
The article shared that Tesla has increased the prices of its vehicles on multiple occasions this year, and now, some of Tesla's EVs cost almost 10 percent more than they did at the start of 2022. Startup electric automakers Rivian and Lucid have also increased prices, and that seems to be the story across much of the industry, even among legacy automakers, such as Ford and General Motors.
Automakers are citing a rise in material costs as a primary reason for the price hikes. Autoblog says material costs have skyrocketed by 144 percent since March 2020. According to the research, some materials have doubled in cost since the pandemic, and Ford Finance CEO John Lawler admitted that the rising costs have made EVs like the Ford Mustang Mach-E essentially unprofitable. However, soaring demand is almost certain to push prices up as well.
The report also points out that research and development costs for new electric vehicles contribute significantly to the price increases. AlixPartners estimates that automakers as a whole will spend $526 billion by 2026 due to the transition to electric cars.
Fortunately, there are still some relatively affordable EVs on the market. Sadly, that doesn't mean it will be easy to get one. In an automotive market where it's difficult to get just about any popular car quickly, it's likely more difficult to get a compelling EV, especially in some areas around the country.