You used to go to a car dealer to purchase a new car. The salesperson would push, twist, jostle and push to sell you a vehicle. “Sit inside.” “Nice, right?” “Leather seats. Touchscreen. “What’s it going to take to get you into this car today?” “Leather seats.” Today, the customer is the one who asks for a deal at dealerships. This is true for both trucks and gas cars.
However, the situation is worse for electric and hybrid vehicles. There has been a huge shortage of inventory that has made purchasing difficult. This is resulting in prices that are absurdly out of touch with reality.
The wait for a Tesla Model Y new crossover is almost a year. The wait time for Tesla’s other models of cars, such as the S and X, is almost the same. Elon Musk’s E.V.s don’t have the fastest wait times.
Volkswagen CEO Herbert Diess said that all-electric versions of his company’s cars are “basically sold-out…in Europe, and in the United States” during the remainder of the year. Ford’s Mustang Mach-E luxury SUV is also out of stock for this year.
Some manufacturers have stopped accepting new orders for electric trucks because of strong consumer demand. According to Kelley Blue Book, the Lightning electric pickup truck from Ford has a three-year wait. The Tesla Cybertruck is due to enter production in 2023.
Musk stated earlier this year that he would no longer accept new reservations. Musk stated that there are more orders for the first Cybertrucks than the company can fulfill in three years. This was at the 2022 Financial Times Future of the Car conference. Rivian, the sleek new electric truck supported by Jeff Bezos is in high demand. Used models sell online for nearly twice the price of new ones.
Cars.com tracks U.S. sales and reports that demand is so great that dealer inventories of new vehicles have plummeted 70% in the past three years. In April 2019, there were 3.4 million cars for sale; however, by April 2019, that number had fallen to just over one million. J.D., a consumer-research firm, reported that the average time a new car sits at a dealership before it’s purchased was just three weeks.
Power reported that the average time a car is sitting at a dealership before it is purchased was only three weeks. This compares to 49 days last year. Preorders are the best way to get in-demand cars. Many vehicles sell for thousands more than the list price.
Supply-chain problems are responsible for a lot of the madness. We’ve heard about the chip shortage since the pandemic. It affects all car supplies. Electric vehicles are dependent on components that are so highly demanded that miners and manufacturers of metals and chemicals can’t keep pace. According to AlixPartners, electric-car batteries are made of cobalt and nickel. Their prices have increased significantly. The E.V.
According to Josh D. Boone (executive director of Veloz), a non-profit advocate for electric cars, the market is experiencing some unusual bumps. While automakers are trying to increase production to pre-COVID levels, they are still facing worker shortages and supply limitations.
Shipping delays, chip shortages, and wire-harness shortages are all problems relating to early pandemic-related shutdowns, continuing supply-chain complications, and China’s zero COVID policy.
There’s also inflation, which is both cause-effect of these outrageously high prices. The latest Consumer Price Index measures inflation in the U.S. and shows that prices for all indexed goods rose by 8.6% over 12 months. Guess what was driving this rise? Bingo! Both new and used cars.
The index found that new cars are up 12.6% and used cars are up a shocking 16%. It is so bad that used cars sell for more than what they were bought for. There are stories about people who bought a car three years ago and then sold it to their dealership for the exact same price or higher today.
These economics often work out quickly. Some of the gas-car price drops are already happening, but consumers who wish to purchase hybrid or electric vehicles will not see an end to their options. Gas prices have risen due to the war in Ukraine, which has highlighted electric vehicles’ benefits.
A number of electric trucks are now available in the American heartland. They don’t want tiny electric cars but want something bigger and better. According to The New York Times, less than 1% of American cars are electric. Given that inflationary spending and supply-chain problems are likely to continue, demand for electric vehicles will likely outweigh supply in the near future.
However, there is another scenario in which the laws of supply-demand are broken by rising prices or inventory shortages. While consumers will pay more for gas to save money, electric cars are not economically viable above a certain price point.
Tesla has raised the prices of some of its cars this year by several thousand dollars. Musk has indicated that further increases may be coming.
Deboeuf stated that if E.V.s aren’t made cheaper, the market would collapse. According to Deboeuf, if electric cars become too expensive to manufacture, consumers will decide that they are not worth the cost, then automakers may be forced to lower prices to meet consumer demand. Profit margins could also collapse and the whole system could lose its weight.
The importance of electric cars goes beyond the supply chain and gas prices. In a world where the Supreme Court seems determined to tie the hands of the Environmental Protection Agency, and other administrative departments, replacing gas cars with electric vehicles is crucial to combating climate change. The federal tax credit for electric cars is currently available to Americans. It can be as high as $7,500. However, the Biden Administration would like to increase that number to $12,500. However, given the insane numbers that are circulating around dealership lots, the target number might need to be increased if we really want to address the climate crisis.