Photo: Hyundai
The price cuts that Tesla operated in January are still taking a toll on legacy carmakers, as car dealers find it more challenging to sell new EVs. Although the demand for new cars is still strong, dealers sell electric and hybrid vehicles at a discount while marking up ICE models.
It's hard to be a legacy carmaker these days, as Tesla is turning up the heat with deep discounts and other incentives. The IRA tax credit is another reason some electric vehicles are not selling as fast as dealers wanted. This has put pressure on them at a time when demand for cars has slowed, mostly because of inflation, high interest rates, and employment concerns.
This has reduced the dealers' profits, with the industry's average markup at 8.5% above MSRP in June, down from 10.2% in June 2022. Besides interest rates, inflation has also affected new car sales, with the average MSRP increasing by 7.4% in the past year. In June, the average vehicle had an MSRP of $42,645, up from $39,712 in June 2022.
An iSeeCars study found that not all car models are equal, and some are selling for huge markups, while others struggle even when priced below the MSRP. In the latter group are now six models, up from only three in February: Chrysler Pacifica Hybrid, Infiniti QX80, Ford F-150 Hybrid, Hyundai Ioniq 5, Hyundai Ioniq 6, and the Chevrolet Silverado. Four of them are electric or hybrid, showing that selling clean vehicles is harder than ever.
The Hyundai Ioniq 5 and Ioniq 6 sales suffer because they don't qualify for the IRA tax credit. This prompted dealers to price them more aggressively. The hybrid models are less popular now, partly because gas prices have decreased and also because electric vehicles have become more popular. A similar trend was seen in the used-car market, with average prices dropping by 30 percent in value.
While these are average prices, you can find dealers that offer deep discounts on some EV models. For instance, the Hyundai Ioniq 5 sells, on average, 0.5% below the MSRP at $51,298 instead of $51,555. Still, several dealers surveyed by iSeeCars sell the electric model with discounts as high as 3.6%, or $1,823. The same applies to other EV models, such as the Kia EV6, Volvo C40 Recharge, or Volkswagen ID.4.
The study appears to confirm the myth of hard-selling electric vehicles after Ford, GM, and Volkswagen reported slowing EV sales. I think this doesn't reflect a market trend but rather the lack of interest in EVs produced by legacy carmakers and the poor dealership experience. While most dealers report poor EV sales, Tesla is growing at a fast pace.
This is correctly reflected by the overall EV sales, which comprise almost 10% of the US car market. The growing proportion of electric vehicles in car sales shows that customers love EVs but hate those produced by traditional automakers and, above all, hate interacting with their dealers.
This has reduced the dealers' profits, with the industry's average markup at 8.5% above MSRP in June, down from 10.2% in June 2022. Besides interest rates, inflation has also affected new car sales, with the average MSRP increasing by 7.4% in the past year. In June, the average vehicle had an MSRP of $42,645, up from $39,712 in June 2022.
An iSeeCars study found that not all car models are equal, and some are selling for huge markups, while others struggle even when priced below the MSRP. In the latter group are now six models, up from only three in February: Chrysler Pacifica Hybrid, Infiniti QX80, Ford F-150 Hybrid, Hyundai Ioniq 5, Hyundai Ioniq 6, and the Chevrolet Silverado. Four of them are electric or hybrid, showing that selling clean vehicles is harder than ever.
The Hyundai Ioniq 5 and Ioniq 6 sales suffer because they don't qualify for the IRA tax credit. This prompted dealers to price them more aggressively. The hybrid models are less popular now, partly because gas prices have decreased and also because electric vehicles have become more popular. A similar trend was seen in the used-car market, with average prices dropping by 30 percent in value.
While these are average prices, you can find dealers that offer deep discounts on some EV models. For instance, the Hyundai Ioniq 5 sells, on average, 0.5% below the MSRP at $51,298 instead of $51,555. Still, several dealers surveyed by iSeeCars sell the electric model with discounts as high as 3.6%, or $1,823. The same applies to other EV models, such as the Kia EV6, Volvo C40 Recharge, or Volkswagen ID.4.
The study appears to confirm the myth of hard-selling electric vehicles after Ford, GM, and Volkswagen reported slowing EV sales. I think this doesn't reflect a market trend but rather the lack of interest in EVs produced by legacy carmakers and the poor dealership experience. While most dealers report poor EV sales, Tesla is growing at a fast pace.
This is correctly reflected by the overall EV sales, which comprise almost 10% of the US car market. The growing proportion of electric vehicles in car sales shows that customers love EVs but hate those produced by traditional automakers and, above all, hate interacting with their dealers.
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