The electric vehicle (EV) industry is experiencing a significant shift as we move into the second half of 2023. With new developments in inventory, pricing, and market competition, the landscape is changing rapidly. Here's a look at the latest news and trends in the EV market.
Stabilizing Inventory and Growing EV Supply
According to a recent report from Cox Automotive, new-vehicle inventory is stabilizing at around 1.95 million units, with electric vehicles having twice the days' supply as all new vehicles. The total U.S. supply of available unsold new vehicles stood at 1.95 million units at the end of June 2023, only slightly down from 1.96 million at the end of May.
Interestingly, the inventory of EVs grew further in June, closing the month at a 103 days' supply. The industry had 90,953 EVs in supply during the 30 days that ended June 26, with 26,420 sold and an average listing price of $63,486. The numbers exclude Tesla, which sells direct to consumers.
Tesla's Global Price Cuts
In a surprising move, Tesla Inc has slashed prices globally on its electric vehicles by as much as 20%, extending an aggressive discounting effort and challenging rivals after missing Wall Street delivery estimates for 2022. This move marks a reversal from the automaker's strategy over the last two years when new vehicle orders exceeded supply. It comes after CEO Elon Musk warned that the prospect of recession and higher interest rates meant it could lower prices to sustain growth at the expense of profit.
Tesla lowered prices across the United States, Europe, the Middle East, and Africa, following a series of cuts last week in Asia. The U.S. price cuts on Tesla's global top-sellers the Model 3 sedan and Model Y crossover SUV were between 6% and 20%, with the basic Model Y now costing $52,990, down from $65,990. These cuts are before a $7,500 U.S. federal tax credit that took effect for many electric vehicles on Jan. 1 that could bring discounts to more than 30%. Tesla also cut prices for its Model X luxury crossover SUV and Model S sedan in the United States (source).
The Impact on the Market
These developments have significant implications for the EV market. The increase in EV supply indicates a growing readiness of the industry to meet consumer demand. However, the stabilization of inventory suggests that sales are not keeping pace with production. This could be due to a variety of factors, including high prices, lack of charging infrastructure, and consumer hesitancy to switch from traditional gasoline vehicles.
Tesla's aggressive price cuts are likely to shake up the market. By making their vehicles more affordable, Tesla is not only increasing its competitive edge but also putting pressure on other automakers to lower their prices. This could lead to a more affordable EV market overall, which would likely drive up demand.
However, these price cuts could also squeeze profit margins and lead to a potential oversupply if sales do not pick up. It's a bold move that shows Tesla's commitment to maintaining its market leadership and growing the EV market, but it's not without risks.
As we move forward, it will be interesting to see how these trends develop. Will other automakers follow Tesla's lead and lower their prices? Will the increase in EV supply lead to a surge in sales, or will we see a glut of unsold vehicles? And how will these developments affect the broader auto industry and the push towards cleaner, more sustainable transportation? These are the questions that will shape the future of the EV industry. Stay tuned for more updates as we continue to monitor this rapidly evolving market.