The Average Cost of an Electric Car Is Now $54,000

Photo: Christopher Furlong (Getty Images)

The average cost of buying an electric car is now $10,000 more than purchasing a gas-powered vehicle, Japanese lawmakers want to cut targets for zero-emission vehicles, and the Hyundai Ioniq 5. All that and more in The Morning Shift for June 27, 2022.

1st Gear: The Average Cost of EVs Is on the Rise

Everyone knows that electric vehicles are more expensive than their gas-powered counterparts. Thanks to increasing demand for battery-powered cars and the rising costs of the components needed to make them, many EV manufacturers are raising the prices of their cars even more.

The Wall Street Journal reports that price hikes from the likes of GM, Tesla and Ford now mean that the average price of a new EV has hit $54,000 — making it around $10,000 more than the average cost of a new gas-powered car.

According to the WSJ, carmakers have been steadily raising the prices of their EVs “partly to offset the soaring cost of materials used in their large batteries.” This has included a hike in the cost of a Hummer EV by more than $6,000 and a warning from Ford that it was no longer making a profit on sales of its Mustang Mach-E. The WSJ reports:

“The companies say they are trying to offset a recent price rise in raw materials that go into the batteries to power electric cars, by far the most expensive component of an EV. Prices for lithium, nickel and cobalt have roughly doubled since before the Covid-19 pandemic began, according to consulting firm AlixPartners LLP.”

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In recent months, Tesla and Rivian have also raised the prices of their fleets of electric vehicles. This, coupled with, in some cases, phased-out EV tax credits mean that one of the biggest barriers to EV adoption seems to be getting bigger.

However, as more marques launch their battery-powered models onto the scene, competition could force prices to trend in the opposite direction. Here’s hoping the release of new models from the likes of VW, VinFast and Hyundai can help do that.

2nd Gear: Japan Wants to cut Zero-Emission Vehicle Targets

While countries around the world are targeting a shift to zero-emission vehicles like EVs, hydrogen-powered trucks or other cleaner means of power, Japan appears to be dragging its feet.

The country, which is home to automakers such as Toyota, Subaru, and Honda has reportedly lobbied its fellow G7 countries to remove targets for zero-emission vehicles from its goals to tackle climate change. As reported by Reuters:

“Japan has proposed removing a reference to a ‘collective goal of at least 50% zero-emission vehicles by 2030’, according to a draft of the communique reviewed by Reuters.

“In its place it has proposed a less concrete target of ‘significantly increasing the sale, share and uptake of zero-emission light duty vehicles recognising the range of pathways that members are adopting to approach these goals’, according to the draft.”

That all sounds pretty wishy-washy to me, as there’s nothing quite like replacing a hard, numerical goal with something vague like “significantly increasing” sales of zero-emission vehicles. Who defines what a significant increase looks like?

Here in the U.S., President Biden has said he wants 50% of all new vehicles sold to be zero-emission by 2030. This would see sales of such cars rise from 340,000 in 2020 to almost 9 million per year by 2030.

3rd Gear: Rising Gas Prices Aren’t to Shift Smaller cars

And it isn’t just global targets for EV adoption that could struggle to encourage people to buy battery-powered vehicles, the rising price of gas isn’t doing much to help the switch either.

Where you might expect that the current $5 per gallon average we’re facing in the U.S. might force people to reconsider their daily drivers, a new report from Automotive News says this hasn’t quite happened yet.

The report found that despite the high cost of refilling the tank on your F-150 or Suburban, drivers across the country remain tied to their larger cars. This, it says, is at odds with what happened in 2008, when fuel prices also saw a sharp rise that topped out at $4 per gallon. Back then, automakers rushed to push out more economical vehicles because of consumer demand. (See also: Chrysler’s doomed EV project from back then.)

But now, automakers aren’t seeing similar demand. And that, according to the report, is as a result of the increased efficiency of these larger cars in 2022 compared with 2008. According to Automotive News:

“Aside from a proliferation of electrified options, experts point to a significant improvement in the fuel economy of most internal-combustion vehicles, including large pickups and utilities. A 2022 four-wheel-drive Ford F-150, for example, is rated at 21 mpg combined, 50 percent better than a comparable 2008 model.”

As such, Automotive News reports that demand for new, gas-powered cars and trucks remains high. So much so that suppressed inventories as a result of production issues still can’t quite keep up with consumer interest.

4th Gear: Infiniti Banking on a Brand Refresh

While it might feel like Infiniti has been a little bit forgotten in recent years, that’s all about to change for the premium offering from Nissan. According to the brand, it has a refresh up its sleeve that will include an all-new QX80 that will form the centerpiece of a bit of a brand makeover.

Automotive News reports that Infiniti is preparing the relaunch for the coming months. According to the site:

“Outlining the plan publicly for the first time, Infiniti Chairman Peyman Kargar told Automotive News the campaign will kick off in this fiscal year and develop a more consistent and sophisticated brand image.

“The plans include a new look for Infiniti dealerships, a new design language for its vehicles and a flurry of accents to impress customers, such as a unique Infiniti scent and signature sound.”

The relaunch will center around the next-generation QX80, which the group hopes will be able to assert its place as a true luxury SUV. If this works, Infiniti will be hoping to transform its fortunes of recent years, which saw sales plummet by 55% globally in 2021 and by almost half here in the U.S.

5th Gear: Hyundai and Kia are Sweeping the EV Floor

Infiniti should maybe take a leaf out of Hyundai and Kia’s playbook. That’s because the two carmakers have been sweeping up since launching their newest EVs here in the U.S.

In fact, Bloomberg reports that the Ioniq 5 from Hyundai and the EV6 from Kia were two of the best-selling electric vehicles in the US for the first five months of 2022. The two new EVs outsold everything from the Ford Mustang Mach-E to the Chevrolet Bolt and Nissan Leaf. According to Bloomberg:

“Earlier this year, the South Korean carmakers rolled out two new battery-powered cars — the Hyundai Ioniq 5 and its sibling, the Kia EV6 — which promptly tore up the sales charts, passing the Nissan Leaf, Chevrolet Bolt and every other electric vehicle on the market not made by Tesla. In the US this year through May, Hyundai and Kia sold 21,467 of these two machines, besting even the white-hot Ford Mustang Mach-E, which was snapped up by 15,718 drivers.”

Is the real key to unlocking EV volume a pair of cool-as-heck battery-powered SUVs disguised as hot hatchbacks? Who knew.

Reverse: Route 66 Enters the History Books

Neutral: How Are You?

It’s a new week, how was your weekend? Do you have anything exciting planned for the week ahead? I’ve got a friend from back home visiting this week, so I’m making a list of super-American things to do while he’s in New York. Any suggestions are always welcome!