Kelley Blue Book (KBB) tracks average transaction prices for new cars, and it just released its most recent report. According to the publication, average selling prices for EVs dropped by an impressive 5.4%, primarily due to Tesla. Still, the average new electric car sold for nearly $59,000, which is still notably higher than the industry average.
KBB's EV sales data for January 2023 reveals that the average transaction price was down $3,363 compared to December 2022. The average transaction price of all new cars in January 2023 in the US only dropped by 0.6%, or $310. However, the average transaction price of cars, in general, was at an all-time high in December, up 5.9%, or $2,768 from the same estimates in December 2021.
With all of that said, the average new-car transaction price in the US in January 2023 came in at $49,388, which may be much higher than many people expected. While the average price of EVs is still about $10,000 more, there has definitely been some immediate progress made on the reduction of electric car prices.
It's also important to note that the average luxury buyer paid $65,953 this January, and luxury car sales were also up considerably last month compared to non-luxury sales. While not all EVs are considered luxury vehicles, many fit the bill, and most are priced as such. Considering that people are paying an average of almost $66,000 for a new luxury vehicle and an average of only $59,000 for a new EV is arguably promising for the electric car pricing situation going forward.
We've been told for years and years that the price of batteries would come down, and economies of scale would kick in more and more as automakers produce more EVs. This should work to bring the price of electric cars down to eventually reach parity with traditional, gas-powered cars. However, until late, we've watched as EV prices have actually risen rather than fallen.
There were many factors involved in EV prices soaring ahead of the recent reduction, including the COVID-19 pandemic and all of the financial and supply chain chaos it caused. In addition, the demand for EVs has grown, which has pushed prices up.
It's important to keep in mind, however, that this was all during a time that the price of most cars, regardless of powertrain, had been rising at an alarming rate. Research manager of economic and industry insights for Cox Automotive Rebecca Rydzewski shared:
“The transaction data from January indicates that overall prices are no longer increasing like they were a year ago. Both luxury and non-luxury prices were down month over month, but the mix of luxury vehicle sales last month – at a record high near 20% – helped keep the overall average price elevated.”
KBB points to Tesla as the primary reason we're seeing such a drop in the average transition price of EVs in January 2023. Based on the publication's data, the US EV maker's average transaction price decreased 8.4% ($5,440) from December 2022 to January 2023, and the brand's prices were already reduced in December compared to previous months.
Tesla's average transaction price this January was also down 5.5% compared to that of January 2022, which wasn't long before the company began raising prices and continued to do so throughout the majority of 2022 as a whole.
Do you see average transaction prices for EVs continuing to fall, or is this just temporary? Does Tesla really stand to control EV transaction pricing for the foreseeable future? Leave us a comment.