The electric vehicle (EV) market in the US is currently experiencing a surplus of supply, creating a great opportunity for buyers. With over 50 unique models to choose from, more than double the options available just two years ago, consumers have a wide range of EVs to consider. In addition, EV inventories have increased fivefold over the past year, according to CarGurus, a digital listing platform. This surplus has led to significant discounts on EVs, making them more affordable than ever before.
For instance, a battery-powered BMW iX is currently listed in Los Angeles at a discounted price of $80,195, a 17% reduction from its original sticker price. In Kansas City, an all-new Nissan Ariya is available for $36,690, a discount of 18%. In Atlanta, buyers can find the Hyundai Kona Electric for just $29,990, a remarkable 31% discount, making it nearly as affordable as its gas-powered counterpart.
This surplus of EVs and the resulting discounts come at an opportune time for buyers in the US. However, the excess inventory is not expected to last long. With rising interest rates and steady inflation, pricing has been a major hurdle for EV adoption. While the demand for EVs has been steadily increasing, many potential buyers have struggled to find an affordable option. In fact, as recently as October, the average listing price for an EV on CarGurus was 28% higher than that of a traditional gas-powered vehicle.
Moreover, allocation formulas play a role in the availability of EVs. Cars coming out of US factories are often directed to dealerships in states such as California, which have regulations that restrict gas car sales. As a result, there are large areas in the country where EVs are scarce or unavailable.
However, the tide seems to be turning. Tesla has been leading the way by continuously reducing prices on its popular models, prompting other automakers like Ford to follow suit. Average prices on popular EV models like Toyota's bZ4X, the Kia Niro EV, and the Chevrolet Bolt EUV have decreased over the past year.
While this may spell good news for buyers, it has created some challenges for automakers. The surplus of EVs and the price wars initiated by Tesla have resulted in a slowdown in EV demand. Some automakers have decided to delay or scale back their EV production plans. Ford, for example, has delayed $12 billion in EV spending and slowed down production of its popular Mustang Mach-E. GM also delayed certain models and abandoned its goal of manufacturing 400,000 EVs by mid-2024.
Despite these challenges, the momentum of the electric vehicle market is undeniable. EV sales in the US have increased by almost 2.5 times in the past year. In several US states, including California, EVs accounted for more than 10% of new car sales. The perception that the market is falling apart is simply not accurate.
However, the supply and demand dynamics for EVs vary depending on the model. Vehicles that strike a balance between price, range, features, and design are selling quickly. Models like the Chevrolet Bolt, with its relatively high range and affordable price, are in short supply. Similarly, the Cadillac Lyric, a luxury SUV priced below $60,000, is also in high demand.
It is essential to note that buyers have not lost interest in EVs. The weaker demand for some models is largely due to their higher price tags. However, lower-priced EVs that qualify for federal incentives have been selling rapidly. As the EV market continues to grow, pricing and affordability will play an increasingly important role, similar to the traditional car market.
In conclusion, the current surplus of EVs in the US market is creating favorable conditions for buyers. With a wide range of models to choose from and significant discounts available, this is an excellent time to consider purchasing an electric vehicle. However, as the surplus diminishes, buyers are advised to act quickly to take advantage of the current affordability and availability of EVs.