The average price for highly sought-after electric vehicles eased down in January, but only because Tesla, with about 60% of EV market share, cut prices to keep customers, according to the latest numbers from Kelley Blue Book.
The average new EV in the U.S. sold for $58,725, down by $3,363 (5.4%) compared to December but still well above the industry average, according to Kelley Blue Book estimates.
That decline can be attributed mostly to a decrease in the average Tesla transaction prices of $5,440, down 8.4% month over month and down 5.5% year over year. As a result, Tesla sales in January increased YOY by more than 30%.
The average listing price — or the asking price — for all new vehicles leaped to another record $47,743 as of Jan. 31, up from a revised $47,531 at the end of December, according to Cox Automotive’s analysis of data. The listing price was 6% higher than in January 2021.
The average transaction price (ATP) — or the price paid — declined slightly in January to $49,388, down 0.6% or $310 from December’s record. The January ATP was up nearly 6% from a year ago, and the share of luxury brand sales was at a record high near 20%.
Because Tesla reigns in the electric vehicles market, it ends up bringing average EV prices down slightly, said Brian Moody, editor of Kelley Blue Book. The wide gulf between top-ranked Tesla and the second and below ranked EV-makers in sales means it will influence the market the most.
“When someone is that dominant, it will affect everyone,” Moody said. “There’s a lot of demand for new cars of all kinds. The one barrier to people getting them is price. The lower the price, the more buyers you get.”
While Tesla and Ford are so far the only OEMs on record for cutting EV prices, it doesn’t mean other carmakers haven’t done the same either quietly or with incentives, Moody said.
Long-term, EV prices could still vary as automakers and sellers balance limited supply against maintaining profitable demand.
“There is a presumption that prices could come down due to abundance,” Moody said of anticipated growth in makes and models of EVs. “There may be an overabundance of electric cars during the next few years.”
Fleets Not a Priority
Moody doesn’t foresee many discounted EVs for the fleet market, however, given that OEMs with limited supply will prefer higher-paying consumers in the retail market.
While EVs are a good fit for the routes and duty cycles of fleet vehicles, especially in the public sector, fleet EV sales don’t deliver the profit margins for OEMs that they get from retail buyers, he said. Since fleet vehicles generally run on local, predictable routes, an EV eventually can save time and money even at a higher price point by charging at night and staying within fixed service cycles.
Mixed Values for Used EVs
In the used EV market, resellers are finding that EVs hold more value within the first few years but then drop off steeper when compared to ICE vehicles, especially if they are out of warranty.
“Electric vehicles depreciate quite a bit,” Moody said. “When you have uncertainty about new technology, people will not seek the vehicle much unless it’s under warranty.”
After five years, a used Chevrolet Bolt retains about 55% of its original value, compared to 45% for the Audi eTron GT, 41% for the Nissan LEAF, and 27% for the Hyundai Kona, said Moody, citing KBB figures.
Tesla models sell for about 40-45% of their original value after five years.