In a marked shift towards affordability in the electric vehicle (EV) market, 2023 was a pivotal year, with Tesla leading the charge in slashing prices across its vehicle lineup. This strategic move sparked what industry experts have dubbed an automotive “price war”, exerting immense pressure on other manufacturers and nudging the industry closer to achieving price parity with traditional internal combustion engine (ICE) vehicles.
EV vs gas cars
A revealing report from Cox Automotive, presented in a recent webcast, underscores this trend. The data indicated a steady decline in the average sticker price of Tesla vehicles throughout the year, culminating in an average price of $50,051 in December. This figure is strikingly close to the average price of $48,759 for ICE vehicles in the same period, highlighting the narrowing price gap between EVs and conventional cars.
Following Tesla’s lead, the broader auto industry witnessed a similar downward trajectory in EV pricing. The average sticker price for EVs settled at $50,798, mirroring Tesla’s trend and underscoring a wider industry shift. The overall average price for an EV also saw a decrease from $52,362 in November.
Cox attributes this downward trend in EV prices to a combination of factors, including Tesla’s aggressive pricing strategy, the introduction of more affordable EV options, and various incentives that have made these vehicles more accessible to a broader range of consumers.
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However, the inventory landscape presents a mixed picture. Many automakers are grappling with significantly higher inventory levels for EVs compared to ICE vehicles. By the end of the year, dealers were carrying an average of 113 days’ supply of EVs, a sharp 92 percent increase. In contrast, ICE vehicle inventories averaged a supply of 69 days in December, only slightly higher than the rest of the year.
Interestingly, companies like Tesla and Rivian stand apart in this scenario, thanks to their direct-to-consumer sales models, which naturally result in lower inventory levels. This business approach has helped them maintain a more balanced inventory, avoiding the excesses seen in other parts of the industry.
As the EV market continues to evolve, the trend towards more competitively priced models is likely to drive further adoption, bringing electric vehicles into the mainstream and marking a significant step forward in sustainable transportation.