Over the past few months, Tesla, Ford, General Motors, Rivian and Lucid have all raised the prices of their electric vehicles.
On June 16, Tesla significantly raised the price of electric vehicles across all of its product lines , with some models increasing by as much as $6,000. Tesla’s best-selling Model Y has raised prices three times this year, raising prices by about 9%.
Last week, GM raised the price of the GMC Hummer electric pickup by $6,250, citing increased commodity and logistics costs, which currently range from $85,000 to $105,000.
Overall, the average price of an electric vehicle in the U.S. rose 22% in May from a year earlier to about $54,000, according to JD Power. By comparison, the average payment for a gasoline vehicle only increased by 14% to about $44,400 over the period.
Electric vehicle companies say recent increases in the price of raw materials for batteries, by far the most expensive component in electric vehicles, are a big factor in the rise in prices for electric vehicles. Prices of lithium, nickel and cobalt have roughly doubled since the global pandemic began, according to consultancy AlixPartners.
Auto industry funding for electric vehicle development has doubled in the past two years , according to estimates by AlixPartners . Companies are expected to spend a combined $526 billion on the transition to electric vehicles over the five-year period ending in 2026, the company said.
Analysts at AlixPartners said that rising raw material prices could increase investment. Electric vehicles have smaller profit margins than gasoline-powered vehicles, and large battery packs cost as much as one-third of the total vehicle cost.
To protect their profits, auto companies need to work closely with material producers and even directly with companies that mine lithium and cobalt, Credit Suisse analyst Dan Levy wrote in an investor note this month to ensure that Supply and control costs. Tesla, General Motors and other automakers have signed up to these kinds of direct supply deals.
If raw material costs eventually come down, car companies may cut prices, Levy said. But auto industry executives generally say they’re not worried for now that higher prices will hurt consumers’ appetite for electric vehicles.
Rising gasoline prices are fueling interest in electric vehicles, according to a survey by car-shopping site TrueCar this spring . More than half of those surveyed said they were more likely to consider buying an electric vehicle because rising gasoline prices were unbearable.