EV prices are going in the wrong direction

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Mass adoption of electric vehicles is hampered by cost. The average price of an EV hit an all time high earlier this summer. As EV battery packs became more efficient, the auto industry promised that prices would come down.

The rate at which EV prices are increasing is disappointing. According to a recent analysis by car shopping database i SeeCars, electric car prices saw a year over year increase of 54.3% while gas-powered cars were up just 10%.

There are many reasons EV prices have gone up. The global chip shortage caused huge production problems for the industry and caused vehicle sales to fall. Because of high gas prices, car buyers snatched up all the EV's they could find at the dealer lots, causing a steep drop in inventory.

In order to determine the price growth of electric cars compared to conventional fuel vehicles, i SeeCars analyzed the prices of over 13 million used cars sold between January and July of 2021.

They found that the price of EV's went up by 54.1% in January 2022, thanks to high gas prices. In March, the price increases for both gas and electric vehicles went down, but they went back up in the summer, despite the fact that they had gone down for conventional vehicles.

The Nissan Leaf and the Chevy Bolt EV are two of the cheapest cars on the market. A used Leaf is now selling for an average of $28,787, which is a 45 percent increase compared to the previous year. Nissan is said to be considering ending the Leaf in the next few years. The Bolt, which recently got a huge price discount, has an average of $28,289 over the next four years.

Image: Spencer Platt/Getty Images

The Model S has seen a price jump of over twenty percent, and has gone up on average nineteen percent. The only EV that went down in price was thePorsche Taycan. There is a ceiling of what car buyers are willing to pay for a used EV.

The price of some new EV's, like the Ford F-150 Lightning, are being marked up by dealers. This has led to a cycle of enraged customers and resulted in news stories about the outrage. The most popular models are sold out.

Changing market conditions and rising commodity costs are causing EV prices to go up. A rise in cell costs could be as much as 20% if experts are correct in their predictions of a sharp increase in battery minerals over the next few years.

This price surge may be short lived. There are a lot of positive developments on the way that could lead to stabilization of EV prices.

President Joe Biden just signed the Inflation Reduction Act, which provides a tax credit for new and used electric vehicles if they are produced in North America and use parts from the US and its trading partners. There is an expected wave of new, more affordable EVs coming on the market, like the Chevy Equinox EV, which GM has said will start at $30,000, and millions of cheaper models emerging from a partnership between GM and Honda.

While sticker shock is likely to be a major obstacle to mass adoption of EV, it may not be the status quo for a long time.

More and more affordable new electric vehicles are entering the market, which means that used EV's won't be as much of a novelty once supply chain issues begin to improve It's important to be patient because used EV prices are expected to decline in the coming months.