The past 12 months have been wild for electric vehicle prices as Tesla disrupted the market once again with its generous price cuts.
A study from Kelley Blue Book that tracks monthly average transaction prices (ATPs) and how they compare to the previous month and the same month from a year prior shows the extent of these price cuts and how other automakers have reacted to Tesla's price reductions.
Electric vehicle average transaction prices (ATP) were down nearly 18 percent year over year in July 2023 to $53,469 from $65,108 one year ago, led by price cuts at market leader Tesla. The average ATP for EVs in July was down from $53,682 in June and down from more than $61,000 in January.
EV ATPs are down more than 19 percent from their recent peak of more than $66,000 just a little more than a year ago in June 2022.
KBB notes that the price declines in the EV segment have mirrored the inventory increases experienced by some automakers. At the end of July, the EV segment days' supply was near 100 days, while industry days' supply stood at 54 (data excluding Tesla).
Tesla's average transaction price in July 2023 was $54,660, representing a massive 19.9 percent decrease from July 2022 when the brand's ATP was $68,215 and a 0.8 percent decrease over June 2023's $55,105. The July ATP was Tesla's lowest since April 2020, with the year-over-year ATP reduction being the largest among the automakers that are part of the study.
According to KBB estimates, the lower prices at Tesla are likely helping with sales volume, with the automaker reaching a record high volume of 59,813 units in July.
"The year-over-year decline of EV ATPs has been led by Tesla slashing prices on its popular models," said Rebecca Rydzewski, research manager at Cox Automotive, the parent company of KBB.
"Tesla prices are down nearly 20% versus a year ago, and other EV models, such as the Ford F-150 Lightning, have been following Tesla's lead. While automakers report losing money on electric vehicles, they continue to aggressively pursue EV growth strategies," she added.
The study also shows that incentives for EVs in July were 6.7 percent of ATP, or $3,755. That's almost double the average incentive for all types of vehicles, which stood at $2,148 in July, the highest point in a year.
Despite the big reduction in EV ATPs, the ATP for a new vehicle in the US – all vehicle types combined – was virtually flat (up 0.4 percent) compared to July 2022 at $48,334, the smallest increase in a decade.