4 views left Get unlimited views with a free account

Explore the latest trends and actionable insights on the Global Electric Vehicles market to inform business strategy and pinpoint opportunities and risks

Increase in Raw Material Costs Makes EVs Expensive

Industry: Vehicle Manufacturing
Current: Product Indicators

Electric vehicle prices are increasing at a breakneck speed, with Tesla raising prices by as much as $6,000 per car
Automakers have been raising prices of electric cars partly to offset the soaring cost of materials used in their large batteries
Over the past few months, Tesla Inc, Ford Motor Co., General Motors Co, Rivian Automotive Inc., and Lucid Group Inc. increased prices on certain models of electric vehicles

The increasing prices of gasoline are encouraging more people to consider purchasing an electric vehicle (EV). However, car buyers are set to experience sticker shock at the dealership. Automakers increased the prices of EVs, in part to offset the rising cost of materials used in their large batteries. The automobile industry is also taking advantage of strong consumer interest in EVs as a new wave of plug-in vehicles hits the market.

Industry Overview

Tesla Inc., Ford Motor Co., General Motors Co., Rivian Automotive Inc., and Lucid Group Inc. increased the prices of certain models of EVs in recent months. GM raised the prices of GMC Hummer electric pickup-truck models by $6,250 in the week ending June 24, citing an increase in commodity and logistics costs. Tesla tripled the price of a performance version of its best-selling Model Y SUV in 2022.

Why the Price Increase?

Since the outbreak of the pandemic, raw material costs of EVs rose significantly, forcing automakers, including General Motors and Tesla, and startups such as Lucid and Rivian, to raise the prices of new vehicles. The increasing prices of gas are contributing to the demand for EVs.

Outlook

The increase in the prices of raw materials for EVs comes as automakers plan to launch new models of vehicles over the coming years. According to GlobalData, the global EV market will be worth $470.4 billion in 2022. The higher costs of production are likely to slow down the launch of new vehicles, forcing automakers to prioritize profitability over scale. In the US, the world's largest market for EVs, new electric vehicles are already out of reach of most customers, implying that the affordability of EVs is limited to a small group of wealthy buyers. Despite the recent increase in EV sales, automakers will need to sell them to middle-class buyers to achieve cost-effective battery scale and reduce carbon emissions. With average sticker prices as high as the luxury car segment, this could be a difficult proposition.

Explore the latest trends and actionable insights on the Global Electric Vehicles market to inform business strategy and pinpoint opportunities and risks Explore the latest trends and actionable insights on the Global Electric Vehicles market to inform business strategy and pinpoint opportunities and risks Visit Report Store