Prices of electric vehicles (EVs) experienced a continuous decline throughout 2023, moving closer to achieving cost parity with traditional gas-powered cars, primarily driven by market leader Tesla’s strategic price reductions.
The automotive industry witnessed what many described as a “price war” in the early months of the previous year, initiated by Tesla’s substantial price cuts across its entire vehicle lineup. According to a recent Cox Automotive report presented in a webcast on Monday, the trend of decreasing EV prices persisted throughout the year, bringing the market closer to reaching a price equilibrium with internal combustion engine (ICE) vehicles.
The data from the report illustrates a gradual decrease in the average sticker price of Tesla vehicles, reaching $50,051 in December. This figure was in close proximity to the $48,759 average price tag of ICE vehicles in the same month.
In line with Tesla’s influence, the broader auto industry saw an average EV sticker price of $50,798, indicating a similar downward trajectory throughout the year. Additionally, the overall average price for an EV experienced a decrease from $52,362 in November.
Cox Automotive attributes this downward trend to Tesla’s proactive approach in reducing prices, offering incentives, and expanding options for more affordable EVs entering the market.
Despite the positive trajectory in EV pricing, many automakers are grappling with higher inventory levels for EVs compared to ICE vehicles. Inventory levels for EVs increased by 92 percent, with dealers maintaining an average supply of 113 days by the end of the year. In contrast, ICE inventory averaged a 69-day supply in December, slightly up from the majority of the year.
It’s noteworthy that certain automakers, such as Tesla and Rivian, are not included in the data due to their direct-to-consumer models, which inherently maintain lower inventory levels.
