Friday, June 11, 2021

My Electric Car Search a Year Later: Modest Improvements

Exactly one year ago I wrote about my fruitless attempts to find non-luxury-priced fully electric (i.e., not hybrid) cars in three categories. Repeating my search a year later, this is what I found:

  • Little convertibles: nothing has changed. There was nothing then (at any price), and there is nothing now (at any price).
  • Used electric vehicles (EVs) with a range of 130+ miles for no more than $10,000: again, no change. I was unable to find a used EV with a range of at least 130 miles, no more than 50,000 miles on it, and a price of no more than $10,000. Upping the price limit to even $14,000 didn't help. Used EVs with even moderate range remain expensive.
  • Compact SUVs: Here, things have changed. Thee new models are available, and the price premium for getting into a compact SUV EV has dropped. For details, keep reading.

Changes in the Electric Compact SUV-scape

Last year, the only EVs in the compact SUV category were the Jaguar I-Pace and the Tesla Model Y. Since then, the field has expanded. How much it has expanded depends on how you define SUV. For my purposes, an SUV offers all-wheel drive (AWD), and that knocks cars like the Nissan Leaf, the Chevy Bolt and Bolt EUV, the Kia Niro EV, and the Hyundai Kona Electric out of the running. In addition, I don't count EVs that have been announced, but that you either can't currently order in the United States or for which no MSRP for the USA has been published. That rules out the Hyundai IONIQ 5, the Kia EV6, and the Nissan Ariya. 

That leaves three new contenders for the models from Tesla and Jaguar:

  • The Volkswagen ID.4.
  • The Ford Mustang Mach-E.
  • The Volvo XC40 Recharge. 

In my post last year, I focused on the cost of EVs compared to non-luxury ICE (internal combustion engine) equivalents, so that's what I'll do here. I'm not going to address differences in feature sets.

I went to the web sites for various non-EV compact SUVs and looked up the MSRPs for the cheapest AWD configurations I could find. Here are the results:

The average MSRP for these vehicles is $27,369. That's the price against which I'll compare EV prices. 

I'll apply the federal and state government incentives to EV MSRPs. That has the effect of reducing the MSRP by $10,000 for every manufacturer except Tesla. For Tesla, the reduction is only $2500, because Tesla no longer qualifies for the $7500 federal tax credit. However, Tesla buyers continues to get a $2500 EV rebate in Oregon, and since I live in Oregon, I'm knocking that amount off the MSRP for Tesla (as well as for everybody else).

That yields this:

The price premiums for Tesla and Jaguar keep them firmly in the luxury territory they were in last year. Volvo's 65% premium is somewhat less, but it's still well beyond the 55% price premium threshold for luxury cars that I derived in my last post. These EVs are luxury goods.

For the EVs from VW and Ford, the situation isn't as clear. They demand notable price premiums of 23% and 34% compared to ICE SUVs, but those premiums are well below the 55% average premium associated with luxury compact SUVs. A closer look at the data in my last post, however, shows that the average luxury car price premium at the bottom of the price ranges is 64%. That makes 23% and 34% look even better than they did when put up against the 55% category average. I think it's safe to say that for the VW ID.4 and the Ford Mustang Mach-E, the entry-level MSRPs fall below the luxury level. No compact SUV EV did that last year. This year, two do. That's a noteworthy development. 

The MSRP Problem

Unfortunately, MSRPs are a problematic basis for cost comparisons, because MSRPs are a lousy indication of pricing in the real world. They're suggested retail prices, and for most brands, dealers are free to mark them up or down as they wish. In addition, it's conventional at most dealers to haggle over prices. After MSRP adjustments and haggling, the price paid for a new car is often significantly different from the manufacturer's suggested price. When I bought a Nissan Rogue in 2019, for example, what I ended up paying was some 16% below MSRP. 

My understanding is that new car pricing is currently pretty firm, so it could be that these days you really do have to pony up MSRP (or more) at many dealerships. That's the thing about MSRPs. Sometimes they're higher than the prices people generally pay. Sometimes they're lower.

Demand for many EVs exceeds supply, and that puts dealers in a strong position during negotiations. When I talked to a local dealer about the Volvo XC40 Recharge, I was told there was at least a six month wait for delivery, and final pricing would be discussed only when the car was on the lot. I got essentially the same story at a local VW dealer regarding the ID.4. When I checked out a Kia Niro EV a few years ago, I saw that the dealer had added some $10,000 to the sticker price as a "market adjustment." It would not surprise me if MSRPs for EVs understate how much it actually costs to buy one.

My analysis of EV pricing versus ICE pricing is thus based on MSRP data that are of limited value. It's nice that those data show EV pricing in the compact SUV segment beginning to extend below the luxury level, but it's best to keep the customary grain of salt close at hand.

Beware Bottom Feeding

An additional weakness of my analysis is that I'm looking only at bottom-end MSRPs, i.e., the MSRP for the least expensive variants of the cars being considered. It's often impossible to find such cars on dealer lots. Few buyers want a bare-bones version of the car they buy, and even fewer dealers will resist the urge to add optional equipment to the cars they get from manufacturers. (This phenomenon doesn't exist for carmakers without a dealership network, e.g., Tesla.) Cars with bottom-end MSRPs are rarely sighted in the wild, so even if such MSRPs corresponded to the prices people pay (which they often don't), they would almost certainly convey information about only a small fraction of automobile purchases.

Still, my goal isn't to determine whether EV buyers do pay luxury prices for their vehicles, it's to determine whether they must. A year ago, manufacturers' pricing meant that they had to. This year, thanks to Ford and VW, that isn't the case. That's progress.

1 comment:

jhi said...

What seems to be completely missing from the EV market, at least looking at the market from Europe) is the "station wagon", think Volvo V70. The SUV form factor is not that enticing. Or maybe the station wagon design is completely history, sigh.