![]() “The average consumer can't afford these vehicles,” Edgar Faler, a senior industry analyst with the Centre for Automotive Research based in Ann Arbor Mich., said to CBC. In Canada, prices range between $39,498 and $189,000, or an average of $83,510, according to the Canadian Automobile Association, as reported by CBC. “The average price of an EV is US$ 10,000 to US$ 20,000 higher than that of a traditional internal combustion engine car,” Goldstein recognizes. in the coming years.īut EV affordability is still an obstacle. That access is still limited, but the new Infrastructure Bill plans on building 500,000 chargers across the U.S. That is not much of a problem for the 60% of Americans who live in a single home with a garage, Goldstein believes, but for the other 40% who live in apartments and condos, “they would be totally dependent on public charging stations,” he notes. But now, “the average range of new EVs is 275 miles (440 km), so ‘range anxiety’ is not quite relevant anymore,” states Seth Goldstein, Equity Strategist and Chair, Electric Vehicle Committee, at Morningstar Research Services.Īnother hurdle to EV adoption is the availability of electric chargers. Until recently, many potential buyers were not comfortable with battery autonomy. The price pressure on traditional cars will probably favour EV sales, as some hurdles on their adoption curve are being overcome. “Automakers face major headwinds as they look to establish an all-new EV supply chain, catch Tesla, and win over skeptical buyers - all on top of an increasingly negative economic backdrop,” writes Business Insider. Those profits are being shovelled toward the EV transition, a dynamic that doesn’t favour the reappearance of low-priced models. “Car makers discovered the pricing power the pandemic gave them,” Whiston points out.Īcutely constrained in their production capacity, car makers prioritized their most profitable, higher-priced models. With supply disruptions in car components and higher interest rates, car buying was on a trajectory to get pinched. “Investments in automotive semiconductor capacity have long lead times and need to keep pace with the automotive transition,” i.e., the shift to electric vehicles (EVs). “Over the long-term, the supply issue is complicated as the chip-intensity of a modern car has grown rapidly over the past decade and will continue to do so as we transition to electric vehicles,” points out Adam Staszewski, Research Lead – Global Industrials, at CI Global Asset Management. The chip shortage will probably take a while to go away. That’s twice the lowest post-pandemic low of 973,000 units, but still 55% below the pre-pandemic level of 4.0 million. car inventory totalled 1.84 million vehicles. “And there is still a long way to go with chips,” Whiston adds. ![]() “All chip supplies were going toward consumer electronics to support the work-at-home shift.” But when demand unexpectedly came roaring back, “the chip industry said: ‘Sorry’, Whiston recalls. ![]() When the pandemic hit, the car industry forecast a long recession - which didn’t materialize - and cancelled chip orders. The first factor is a chip-supply shortage “that was more acute in cars than in any other sector,” notes David Whiston, Equity strategist, U.S. In the aftermath of the pandemic, many factors added up to strangle supply in the car market. “Even with three consecutive months of improvement, affordability challenges are limiting access to the new-vehicle market,” commented Cox Automotive Chief Economist Jonathan Smoke. However, in the first three months of 2023, it pedalled back to 42.4, an encouraging sign that remains to be confirmed before it becomes a trend. In the same period, luxury model sales shot up by 163%, from 122,864 units to 323,368.īetween March 2012 and March 2019, the Cox Automotive/Moody’s Analytics Vehicle Affordability Index slowly receded from 35 to 32. To put it in a different perspective, in only five years, the volume of sales of affordable cars dropped by 78%, from 204,593 units down to 43,557. “Five years earlier, in December 2017, the share of vehicles priced US$ 60K-plus was less than 8%,” writes Cox Automotive. In December 2022, only 10 models stood below that threshold, with their share of sales falling below 4%.Īt the other end of the spectrum, in December 2022, more than 25% of new cars sold had prices above US$ 60,000 (above the annual income of the average American) with 90 unique models in that category. In December 2017, 36 models exhibited prices below US$ 25,000 (generally considered affordable) and accounted for 13% of total new car sales.
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