• Officials urge support for domestic electric-vehicle projects
• Policies to unleash autonomous vehicles also under discussion

Advisers to President-elect Donald Trump are recommending a two-pronged approach to reshape the US auto industry: cut federal subsidies to boost electric-vehicle sales while still fostering a domestic supply chain to produce them.

Taken together, the suggestions highlight how Trump’s campaign promise to “terminate” EV mandates could manifest in policies that prioritize domestic carmakers and suppliers — but without taxpayer support for consumers.

The recommendations were outlined as potential policy changes for the incoming Trump administration’s first 100 days in office, according to people familiar with the matter and a document seen by Bloomberg News. Several initiatives dovetail with the desires of conservative, free-market advocates and fuel producers who have long said the US government shouldn’t dictate what cars Americans should drive and make.

Trump’s advisers encouraged relaxing environmental reviews and speeding up permitting for federally funded EV and infrastructure projects, including the development of batteries and critical minerals, according to the document and the people, who asked to not be identified because the deliberations are private.

Read More: Trump Vows Fast Permits for Those Investing $1 Billion in US

Those projects could also potentially benefit from expanded tariffs the advisers are recommending on a suite of EV-related imports, including critical minerals, magnets, batteries, industrial control systems and assembly equipment.

At the same time, the officials are calling for a repeal of federal policies that boost consumer demand for EVs, including the $7,500 federal tax credit for purchasers of plug-in cars, according to the document, which was reported earlier by Reuters.

Biden-era fuel-economy and tailpipe pollution regulations would also be rolled back and reset to 2019 levels. US Environmental Protection Agency approvals that allow California to impose its own limits on tailpipe emissions — including a mandate for 100% EV sales in 2035 — would also be on the chopping block.

The policy options reflect a broader shift away from departing President Joe Biden’s use of industrial policy to combat climate change. Some could also potentially benefit Tesla Inc. Chief Executive Officer Elon Musk, who has emerged as a top Trump adviser and is co-leading a broad effort to identify government waste.

Automotive OEMs face increasing pressure to improve their supply chains, not only to reduce costs and improve efficiency but to meet environmental demands for a lower carbon footprint. Traditional inventory models with centralized warehouses lead to high storage costs, delays, and emissions tied to transportation. As a solution, some forward-thinking OEMs are turning to digital inventories combined with automotive 3D printing, allowing them to print spare parts on demand and locally, thus minimizing logistical burdens and aligning with sustainability goals.

The digital inventory model allows parts to be stored in a virtual form until needed. By integrating 3D printing capabilities, OEMs gain several key advantages. Unlike traditional inventories, which require physical storage, digital inventories allow parts to be manufactured as needed. This approach significantly cuts lead times and minimizes the costs associated with storing and maintaining extensive physical inventories. Localized 3D printing production can protect OEMs from global supply chain disruptions. Instead of depending on far-reaching distribution networks, OEMs can produce parts locally, thereby enhancing resilience to geopolitical and environmental disruptions.

Additionally, The environmental impact of manufacturing and logistics can be substantial. Digital inventories paired with 3D printing not only reduce the need for transportation but also cut down on material waste. For instance, printing components only when required minimizes both production waste and the associated emissions, leading to a more sustainable supply chain.

So far, there are only a handful of firms, such as Auto Additive and Würth Additive, looking to implement such a model in the automotive space. Autentica is another of a growing number of companies aiding OEMs in the digital inventory transformation. Autentica’s approach to digital inventories for the automotive sector centers around a secure platform that combines blockchain technology with non-fungible tokens (NFTs), enabling OEMs to protect and trace their digital assets throughout the supply chain.

In an interview, Autentica CEO Irma Gilbert noted that traditional inventory models are often fraught with inefficiencies and hidden costs, pointing to her own past experiences needing to travel internationally for spare parts due to a lack of local availability. “I realized there had to be a better way,” she explained, leading her to establish Autentica as a solution for digitalizing spare parts with cutting-edge security measures.

Through its NFT-backed platform, Autentica addresses a fundamental challenge in digital part distribution: intellectual property (IP) security. By embedding tokens that secure CAD files, Autentica allows OEMs to distribute digital blueprints safely, ensuring files are used only by authorized service providers. Gilbert underscores the importance of this technology, stating, “NFTs provide a unique identifier for each file, ensuring that the digital asset is protected and can only be used as intended by the OEM.”

The technology enables a seamless process where service providers receive encrypted, streamable files that can be used immediately to print needed parts. Autentica’s approach has also led to significant interest beyond automotive, with OEMs in aerospace and defense also considering similar applications. “The biggest hurdle is changing the traditional mindset of manufacturers,” Gilbert observes, but she notes that early adopters in the automotive sector are beginning to realize substantial operational improvements.

On Jan. 1, 2025, the percentage of potentially eligible used EVs will jump to 89 percent from 65 percent

Almost a quarter of electric vehicles in the U.S. may become eligible for a $4,000 tax credit in January, according to data from Recurrent — but they are not all created equal.

The EV model year must be at least 2 years older than the current calendar year, among other requirements, in order to be eligible for the federal tax credit of up to $4,000. That means on Jan. 1, 2025, 2023 model-year vehicles may qualify, and the percentage of potentially eligible used EVs will jump to 89 percent from 65 percent.

EV volume exploded in 2023, when Americans bought 1.2 million, roughly the same as 2021 and 2022 combined, according to Kelley Blue Book. The lease mix for EVs in July 2023 was 18.7 percent, up from 9.2 percent in July 2022.

It’s “like a high school and this huge freshman class enters,” said Scott Case, CEO of Recurrent. “That’s what’s going on on Jan. 1 because so many more cars” may gain eligibility.

While the tax credit makes late-model-year used EVs more appealing, much older EVs that often have battery and charging issues may be a challenging sell, especially when replacement batteries can cost as much as the vehicle itself, according to a report published Oct. 15 by Consumer Reports.

First-generation EVs have design flaws and technological quirks that render them a mixed bag in terms of value. Late-model used vehicles are typically more reliable, though different climates or histories can affect battery health. Model-year and use-casediscrepancies create a lot of work for consumers interested in purchasing used EVs ahead of the major incentive milestone.

“For certain buyers, a used EV is a really, really great deal,” said Keith Barry, a senior auto reporter at Consumer Reports.

But occasionally, older EVs have battery issues. “If something goes wrong with the battery on one of those first cars, it could be a lot of money,” he said.

The average used EV with 25,000 to 49,999 miles on the odometer costs $27,639, nearly 9 percent cheaper than the $30,261 for a used internal combustion engine model in that mileage range, according to Edmunds.

A battery replacement out of warranty can cost between $6,400 and $20,000, Recurrent said.

Dealers will also have to make the case to skeptical consumers that a battery in a 2023 Tesla Model S is not the same as a 2015 Nissan Leaf’s.

In general, the newer the battery, the better. Those 2023 model-year vehicles coming into tax incentive eligibility are likely in good shape. Today’s batteries should last up to 15 years in moderate climates and up to 12 years in extreme climates, according to the National Renewable Energy Laboratory.

Older batteries have different chemistries and cooling methods. Almost 1 in 5 2013 Model S owners had to replace their batteries after 10 years for $15,000 each, according to a Consumer Reports reliability survey from 2023.

Beyond the broad trend favoring newer batteries and batteries under warranty, consumers will have to do their due diligence via a battery health check. Consumer Reports advised that potential buyers should make sure software is up to date, check out open recalls, ask the dealership or seller for a photo of the dashboard illustrating the car’s range estimate after it has been charged overnight and look at other stats via the onboard diagnostics port.

Issues vary

That’s because vehicles may have varying issues with electric drive motors, charging and battery health depending on how they were used, climates they were driven in and how often drivers employed fast charging, which can degrade the life of a battery. Some vehicles may be able to charge faster than others: Most older EVs had maximum charging acceptance rates of 50 kilowatts, while newer vehicles can have maximum acceptance rates of 240 kW.

“We are still in this transition period, and that’s even more so for used vehicles because there are so many eras of electric cars being sold,” said Barry. “All these quantum leaps that we see every couple of years in the technology, in the charging, in the range — they’re all out there” and “it’s a mixed bag.”

A new Oliver Wyman study, commissioned by NADA, believes the cost advantages of hybrid or direct-to-consumer auto distribution models have been overstated.

Traditional auto dealership franchises may be the most cost-effective way to sell cars after all.

Hybrid and direct-to-consumer vehicle shopping pitched as more efficient alternatives are favored by Tesla and its startup imitators while hybrid or agency models are used by automakers in other countries such as Australia and parts of Europe.

A new Oliver Wyman study, commissioned by the National Automobile Dealers Association,believes the direct-to-consumer cost advantages have been overstated.

“We’ve conclusively shown that the traditional franchise distribution model actually wins when it comes to value,” said Oliver Wyman partner Andy Chien.

The franchised dealership model wins because it offers local sales and service support as well as pricing strategies that can be tailored, Chien said. Instead of eliminating extra steps when shifting from a dealership franchised to a hybrid or direct-to-consumer model, there was only a shift in who handled each activity, the report said.

Rather than reinvent the wheel, dealerships also can improve efficiency within their franchised networks by tweaking their processes rather than drastically overhauling them, the report said. One particular area for improvement: the wide range of distribution costs that exists between brands. Chien said dealers also can boost efficiency by collaborating with providers of different distribution options.

The findings, all regarding the U.S. market, are a hopeful note for franchised dealerships confronting falling profits along with high interest rates, rising inventory and economic challenges, a Cox Automotive survey found this year.

What’s more, the Wyman report — “The Automotive Cost of Distribution: an analysis of new vehicle distribution channels in the United States” — offers a way forward for dealerships confronting vehicle sales competition from direct-to-consumer pioneers such as Tesla and others.

Ford Motor Co., for example, has ambitious plans to sell EVs in the coming years. CEO Jim Farley said in 2022 he wanted dealerships to reduce the cost of delivering an electric vehicle to a customer by as much as $2,000 to compete with Tesla and its rivals that use a direct-to-consumer model to sell cars. Ford has since reduced its EV spending and is focusing more on hybrid vehicles.

Among the report’s other findings:

• The net cost difference between franchised and direct-to-consumer modes of distribution is about $200.
• Direct-to-consumer selling saves money on personnel by eliminating or centralizing dealer-level inventory planning and local marketing. But those savings are partially offset by higher wages manufacturer-owned dealerships pay for labor.
• Hybrid distribution reduces personnel costs to a lesser extent because independent store locations prevent complete centralization.
• All channels spend similarly for national and regional advertising.
• Hybrid distribution reduces local advertising spend by dealerships.
• Direct-to-consumer distribution eliminates competition within the same brand, but it doesn’t have the flexibility that customized transactions do.

Since 1975^[1], the FTC has had a Rule, currently called the “Mail, Internet, or Telephone Order Merchandise Rule” (“Rule”) that requires sellers who solicit buyers to order merchandise through the mail, via the Internet, or by phone to make disclosures regarding the shipment time for ordered merchandise. Sellers must have a reasonable basis to expect that they can ship ordered merchandise within an advertised time frame, or, if no time frame is specified, within 30 days. The Rule also requires that, when a seller cannot ship within the promised time, the seller must obtain the buyer’s consent to a delay in shipping or refund payment for the unshipped merchandise.

For a number of reasons, this Rule has not historically been relevant to dealers. However, with the confluence of: (a) the increase in remote delivery of vehicles; (b) the current new vehicle inventory shortage, and (c) the increased acceptance of vehicle orders (and reservations), this Rule may unexpectedly become relevant to dealers.

Basically, the Rule requires:

1. That when you advertise merchandise (like a vehicle or a part) that can be ordered by a buyer over the phone or internet for shipment to that buyer, you must either:

• state when the merchandise will be delivered, or

• if you make no shipment statement, you must have a reasonable basis for believing that you can ship within 30 days of a completed order.

2. If, after taking a customer’s order, you learn you cannot ship within the time stated or 30
days, you must:

• seek the consumer’s consent to a delayed shipment, or

• if no consent is obtained, promptly refund all the money the customer paid.

There are several additional key details in the Rule that dealers should consider, but if you:

1. Take orders by mail, internet, or phone for vehicles, parts or other merchandise that are not
available for immediate delivery;

2. Deliver that merchandise to consumers, and;

3. Advertise merchandise that is not certain to be available for delivery within 30 days,

—then you may be required to make certain disclosures in your advertisements (including online ads or website inventory), and you could be subject to further disclosure, consent, refund, and other requirements under the Rule.

Bottom line ‐ this is an old Rule with new potential significance. If you think this could apply to you or your dealership’s operations, you should consult with counsel about the potential impact of this Rule. Dealers can also consult the FTC business guide for this Rule for more details.

^[1] The rule was issued in 1975 to cover mail orders and was amended in 1993 to include telephone
orders, and in 2014 to include all internet orders.

This memo is not legal advice and only addresses this federal obligation, not any similar or related obligations under federal or state law. Consult your attorney for about this rule or any related compliance obligation.

Sometimes a picture really is worth a thousand words… which never stopped anyone from writing the thousand words anyway. So it will be with this excellent chart, courtesy of J D Power. I’ll show it first, and then tell you why I think it is so brilliant.

Source: “The J.D. Power U.S. Automotive Performance, Execution and Layout (APEAL) Study^SM  series measures how well each new vehicle provides positive experiences with design, performance, safety, usability, comfort, perceived quality and beyond. The data comes directly from owner assessments of their new vehicle after 90 days of ownership.” Thanks for the chart, JDP!

This excerpted chart from a recent round of APEAL shows how Tesla EVs (left blue column) are holding up against non-Tesla EVs (right blue column). The non-Tesla crowd, after quite a few years of flailing around, has now caught up with and surpassed the Palo Alto Austin firm, though only by a few points (7), and with both performing very well on the 1,000-point APEAL scale. So I wouldn’t make any conclusions about the long-term relative standing of Tesla and the rest based on this one chart.

But check out the puts and takes within that 7-point gap. They almost perfectly reflect the strengths and weaknesses of two fundamentally different approaches to the design of a car. Silicon Valley denizens have long repeated that “the car is actually just a phone – on wheels.” Residents of Stuttgart and other automotive capitals would beg to differ, viewing the car as “wheels – that can also make calls.” And these two world views drive much of the competitive dynamic we see today.

If the car is a phone, then it competes with rivals as phones compete with rivals: exterior design hardly matters (they’re, almost all, black sleek rectangles), and software and silicon are all that do matter. If the car is a car first, then it competes with rivals as OEMs have always competed: on hardware primarily, including its looks and its physical (on the road) performance.

And you can see this theory playing out in the reality the chart represents: Tesla’s advantages (red segments) are primarily software- and silicon-driven, representing the digital world. The other EV brands’ advantages (green segments) are all hardware-driven (exterior and interior design, comfort, driving feel), competing in the physical, analog world. It’s all right there on the page.

Since Americans are all about winning and losing1, let’s now ask, “Which worldview will win?” Spoiler alert: IMHO, neither… and both.

A few years ago, the betting was on digital: let the Model S exterior design run for a decade or two, upgrade the software every month or so, rip out all those antique radio buttons, and replace them with screens and swipes.

But as the modern saying goes, maybe “the vibes have shifted.” Buttons seem to be making a comeback, some Tesla shoppers have been turned off by shoals of look-alike black white or gray Ys and 3s2, and even OTA (over-the-air) updates seem to be losing momentum. I mean, it’s nice that Tesla update 2024.26.1 included something called “Castle Doombad Classic,” but I’m not sure that’s going to sell a few thousand more units. Or any.

The EV entrants that have followed Tesla have to some extent resolved this analog/digital win/lose tension3 and adopted the best of both worlds. Lucid and Rivian exteriors (in my uncredentialed opinion) seem highly styled, and the interiors, while not on the “rich Corinthian leather”4 spectrum, are more lavish than the “youth hostel” minimalism of a Tesla.

So maybe, like so many things in the world of cars, equilibrium, a new normal as it were, will trump extrapolation. Digital? Analog? We’ll take some of both, please.

Closing analogy: Amazon introduced the Kindle in 2010, and 14 years later, despite many pronouncements about the end of the “dead trees” physical paper book, the American Publishers Association states that e-books are still less than 12% of total publishing revenue. We’ll take some of both, please.

1 Sometimes I think my fellow citizens consider tie scores an invention of Communism. The USA has a zero-sum view on life: for me to win, you must lose. For Mustang to win a car mag comparison test, the Camaro must lose. Even if the gap between them is just over whether the cup holder holds a Big Slurp or not.

2 Of course, we have to take note of the towering exception of the Cybertruck, which no one anywhere, at any time, will confuse with anything else.

3 So they’re probably Communists

4 Look it up!

Though auto-loan rates remain high, the good news for beleaguered new-vehicle shoppers is that transaction prices are falling and automakers’ incentives are becoming more lucrative than any period since the pandemic slapped the industry silly. Kelly Blue Book reports that incentives last month rose to around 7.0% of the average transaction price, which is the highest level recorded in over three years and is around 60% higher than a year ago.

Already the average transaction price, which stands at $48,401 according to KBB, is down 0.2% over the past 12 months and have been falling – however slowly – for 10 consecutive months. They’ve so far dropped by 3.1% since they peaked in December, 2022 at $49,929.

KBB says the most generous rebate programs can currently be found at Infiniti, Volkswagen, Audi and Nissan dealerships, though the Stellantis brands (Chrysler, Dodge, Jeep and Ram) remain below the industry average in terms of incentives. 

Incentives are especially rich these days on full electric vehicles, which amount to an average 12% of their transaction prices, according to KBB data, which is twice what had been offered last year at this time. The 2024 versions of a few top-priced Audi models are offering among the richest rebates announced this month with up to $10,000 cash back.

We’re featuring the 25 biggest cash rebates being offered in multiple U.S. regions this month, culled from automakers’ websites, below. Some models offer additional rebates for members of the armed forces and recent college graduates, among other groups. Shoppers can also take advantage of select low-rate or 0.0% financing and discounted lease deals (many electric vehicles offer $7,500 leasing discounts that leverage a loophole in the federal tax credit program).

But be aware that new-car rebate programs often vary by region to address local supply and demand issues, and additional offers are often available to recent college graduates and military members, so be sure to check automakers’ websites and contact area dealerships to verify what’s being offered locally.

Biggest New-Vehicle Cash Rebates For August

1.  2024 Audi A8/S8: Up to $10,000
2.  2024 Audi e-tron GT: Up to $10,000
3.  2024 Audi RS e-tron GT: Up to $10,000
4.  2024 Audi A6: Up to $7,500
5.  2024 Audi Q8/SQ8 e-tron/Sportback: Up to $7,500
6.  2023 Ford F-150 Lightning: Up to $7,500
7.  2024 Genesis GV60: Up to $7,500
8.  2024 Hyundai Ioniq5: Up to $7,500
9.  2024 Hyundai Ioniq6: Up to $7,500
10.  2024 Kia EV6: Up to $7,500
11.  2024 Kia EV9: Up to $7,500
12.  2024 Kia Niro EV: Up to $6,500
13.  2024 Lexus RZ: Up to $7,500
14.  2025 Nissan Leaf: Up to $7,500
15.  2024 Volvo C40 Recharge: Up to $7,500
16.  2023 Ford E-Transit: Up to $7,500
17.  2023 Ford F-150: Up to $7,000
18.  2024 Jeep Grand Cherokee L: Up to $6,500
19.  2024 Jeep Grand Cherokee: Up to $6,000
20.  2024 Chevrolet Silverado 1500: Up to $5,750
21.  2024 Audi S3: Up to $5,000
22.  2024 Audi Q4 e-tron/Sportback: Up to $5,000
23.  2024 Audi Q5/SQ5/SQ5 Sportback: Up to $5,000
24.  2023 Ford Bronco: Up to $5,000
25.  2024 Ram 1500 Classic: Up to $5,000

Ford, GM, Tesla see their stocks fall amid mounting signs of near-term pressure on profits

By Mike Colias

Automakers are warning of profit pressures in their traditional car businesses, a fresh worry that adds to the challenges already posed by the industry’s costly transition to electric vehicles.

Ford Motor, Tesla and Jeep-maker Stellantis last week saw their share prices hammered after posting results that fell short of Wall Street’s expectations. General Motors beat estimates and raised its full-year profit outlook, but its shares also sank.

Car companies for years have made the case that they are ready to become technology companies, with plans to transform cars into battery-powered smartphones on wheels. Those ambitions, coupled with an unprecedented run of profitability fueled by stout pricing, lifted stocks.

Wall Street’s enthusiasm for that vision has faded, as U.S. electric-vehicle demand hasn’t taken off as expected. Now, with signs that pricing is losing steam as the American car buyer grapples with high interest rates, investors are looking for reasons to stick around.

“The overarching feeling for the auto industry is that the good times can’t last,” said Martin French, managing director at auto consulting firm Berylls Strategy Advisors.

Pointing to brighter future

Automotive CEOs tried to persuade Wall Street to look beyond the emerging trouble spots in their current operations to focus on the promise of their future bets. 

Tesla TSLA  last week posted a second straight quarterly profit decline as earnings fell short of analysts’ forecasts, hurt by pricing pressure on EVs, especially in China. Chief Executive Elon Musk reiterated his view that Tesla’s future is tied to autonomous cars and humanoid robots, rather than screwing together cars.

“The value of Tesla overwhelmingly is autonomy,” Musk said in response to a question about whether Tesla’s EV business would be hurt if EV-related tax subsidies in the U.S. were curtailed. “These other things are an annoyance relative to autonomy.”

Tesla’s stock price fell 12 percent the next day and finished the week down 8 percent.

Ford badly missed profit forecasts largely because of costs related to safety recalls and other fixes on older models. On a call with analysts, Chief Executive Jim Farley tried to steer the conversation back to Ford’s software for commercial fleets and the company’s plans to develop low-cost EVs.

Wall Street remained fixated on the unexpected profit shortfall, sending shares down 18 percent the next day, the biggest one-day drop in more than 15 years. 

“The market is not ready to give the company credit for these new and exciting projects,” Morgan Stanley analyst Adam Jonas said. 

Automakers have touted bold makeovers before, only to see their visions fade and return to their industrial, low-margin roots. Many automakers invested heavily in driverless cars and vehicle-sharing ventures in the mid-2010s, for example, only to unwind those projects after they hit technical hurdles or the business case didn’t materialize.

Executives from the traditional automakers say they aren’t abandoning their push into electrics, although some continue to curtail investments in new factories and EV models. Government crackdowns on tailpipe emissions and the expanding threat from Tesla and Chinese EV makers are creating a sense of urgency.

Those massive investments are pressuring legacy carmakers to wring every penny from their traditional combustion-engine businesses. The record sums American shoppers have been paying in recent years have helped, driven by pandemic-related vehicle shortages that created a seller’s market. 

Analysts say that if pricing reverses too much, it will eat into the profits the automakers are counting on to help fund that EV transition.

Last week GM said it expects to spend more on discounts to keep buyers interested, a move that will likely ding its bottom line by about $1 billion in the second half of the year. That was enough to rattle investors, despite GM’s record second-quarter pretax profit of $4.4 billion.

Higher car prices have stuck around longer than many analysts expected, even as the number of vehicles available on dealership lots has rebounded steadily this year. But analysts and auto executives are factoring in more pricing pressure in the months ahead. 

Some analysts point to Stellantis’ hefty backlog of Ram pickup trucks and Jeep SUVs. Tavares said the company is considering deals and price adjustments to clear inventory, but also said it might curb vehicle output to tamp down its surplus of cars. Stellantis shares sank 10 percent over two days following its earnings report.

“Investors are concerned that Stellantis’ elevated inventory could eventually lead to aggressive discounting” that would spill over to GM, Ford and other rivals, Barclays analyst Dan Levy said.

That sort of price battle—once a hallmark of the car business—hasn’t happened since before the pandemic’s onset in early 2020.

Ford’s Farley summed things up this way while explaining the rough quarter to investors: “The remaking of Ford is not without growing pains.”

By Ben Glickman | ben.glickman@wsj.com

Discounts abound as automakers and dealers try to entice hesitant shoppers to make the switch

Electric vehicles were a splurge purchase not long ago. Now they are among the biggest bargains on the dealership lot.

Many electric models have never been cheaper, as automakers splurge on financing deals and cash incentives to sway consumers who might be hesitant to give up their gas guzzlers. The steeper discounts will serve as a test of Americans’ appetite for going electric after months of slowing demand. 

In some cases, electric models that once came with a hefty premium are actually cheaper than their combustion-engine equivalents. Ford Motor’s F-150 Lightning—the centerpiece of the company’s EV strategy when it was unveiled in 2022—is selling for about $5,000 less than its gas-engine alternatives, according to J.D. Power data.   

Still, it won’t come cheap for the car industry: Discounts and deals make EVs that have already drained billions from legacy automakers’ bottom lines even less profitable. Several major automakers are scheduled to report quarterly earnings this week, including Tesla, General Motors and Ford.

Tesla kicked off the trend last year when it began to slash the starting prices for its basic models. Competitors followed suit, leading to an EV price war that has heated up this year.

Car companies have cut their sticker prices for certain battery-powered models. Dealers and manufacturers are also dangling financing deals and cash rebates to draw in consumers, who in some cases can also pay less with the help of federal tax credits. 

Jim Walen, who owns Hyundai, Jeep and Chrysler-Dodge-Ram dealerships in the Seattle area, said pricier EVs aren’t as hot as they had been, as early EV enthusiasts have given way to more price-sensitive consumers. Shoppers now are gravitating to less-expensive electrics. 

“They’re driven by where the value is,” he said. “With government incentives, it’s a jigsaw puzzle.”

‘Waiting for the customers’

Carmakers have been rolling out many new electric entries, pressured by tightening fuel-economy regulations and competition from Tesla and other newcomers. But demand has been weaker than expected, triggering the need for steep discounts.

“The overall competitive landscape for electric vehicles is intensifying,” said Stephanie Valdez Streaty, director of industry insights for research firm Cox Automotive.

The steep discounts haven’t been enough to fuel a return of the torrid EV sales growth of a few years ago. Sales of fully electric models rose 6.8 percent through the first half of the year, according to Motor Intelligence data, a sharp deceleration from near 50 percent growth in 2023. 

Korean automaker Kia has been among the EV sales leaders in the U.S., with its EV6 midsize SUV released a few years ago, and the recent launch of the larger EV9. The company has seen sales rise as it has ramped up cash rebates, said Eric Watson, vice president of sales at Kia America.

“There’s a lot of manufacturers now introducing new electric vehicles and starting to produce them in volume,” he said. “We’re waiting for the customers to catch up.”

Over the past year, weaker demand for battery-powered cars and trucks has left dealers with too much stock, triggering more discounts and cheap-lease offers. Dealerships on average held 125 days worth of supply for EVs as of the beginning of June, according to Cox Automotive, well above the industry norm of around 60 days.

While lower prices could entice some shoppers, consumers have other concerns with electric offerings, such as range anxiety and lack of publicly available chargers.

Automakers have cited a lack of lower-priced choices as one of the biggest barriers to wider acceptance of EVs, and several manufacturers are racing to introduce sub-$30,000 models. 

Jeep-parent Stellantis  and Ford Motor have said they are developing less expensive electric models for the U.S. market as broader demand slows, while Tesla, the EV market leader, has long touted plans for an affordable model. 

Selling at a loss

For now though, most manufacturers are selling EVs at a loss, and deeper discounts are leading to more red ink. 

In the first half of the year, the amount of money buyers paid for Ford’s already-unprofitable EVs declined, finance chief John Lawler said at an investor conference in June. The carmaker is cutting costs to offset the price pressure, which is expected to continue in the second half of 2024, he said.

Ford’s EV division lost about $1.3 billion in the quarter ended in March, excluding taxes and interest expenses. 

EV prices are falling even more sharply on the used lot. As recently as mid-2022, preowned electric cars were going for a roughly 80 percent premium relative to gas equivalents, according to Cox Automotive. Recently, used EVs were only 9 percent higher.

CarGurus data shows nine out of the 10 used cars with the biggest declines in list price in the first half of the year were electric, including the Tesla Model 3 and Subaru Solterra. Used-car buyers can also claim a tax credit of up to $4,000 for their purchase under recently updated rules.

Used-car shoppers considering an electric must gauge what will happen with EV valuations in coming years, CarGurus analyst Kevin Roberts said. That math can be difficult given potentially rapid changes in battery technology in newer EVs, which could hurt used values.

“We’re in unknown territory at this point,” he said.