Electric Car Price Plunge Sparks Crisis in Auto Market..
Dublin: Experts are highlighting a concerning trend in the Irish vehicle market, noting a significant drop in the prices of new electric cars, leading to ripple effects throughout the industry. This price decline has prompted many individuals to sell their electric vehicles, purchased at a substantial cost, at significantly reduced rates, sometimes as low as half of the original price. Among those affected are owners of expensive SUV electric cars, who are experiencing similar depreciation.
While the decrease in prices may appear advantageous for prospective buyers of new vehicles, it poses challenges for the second-hand market, where resale values are plummeting. Even earlier electric vehicle models are struggling to maintain their worth in the second-hand market.
For instance, a Volkswagen ID.4 purchased for 60,000 euros, factoring in government grants, may only fetch 28,000 euros after two years of ownership. Adding the grant, the total would amount to 33,000 euros. However, a German vehicle with equivalent specifications as the ID.4 is now available for the same price. In contrast, a diesel SUV bought for 58,000 euros could potentially be resold for 55,000 euros, indicating a more stable resale value.
Industry analysts, such as Edmunds, caution that this disparity could significantly impact the electric vehicle market, including the demand for new EVs. Many recent EV buyers find themselves facing the challenge of diminished resale prices.
The decreasing cost of lithium-ion batteries is a contributing factor to this trend, with prices dropping below $100 (€93) per unit last year, marking a 33 percent decline from 2022. Further reductions are anticipated, particularly with the entry of Chinese battery manufacturers into the market, pushing prices down to as low as 40 cents per watt-hour. This translates to estimates of 2,500 to 3,000 euros for a 64-kilowatt battery.
Additionally, the market is witnessing the introduction of more affordable electric cars, with some priced as low as 25,000 euros. Notably, companies like BYD are offering budget-friendly options, such as the Dolphin hatchback electric car with a range of 340 km, priced at 25,570 euros. Renault has also entered this segment with the launch of the 25,000 euro Renault 5 at the Geneva Motor Show. Consequently, competitors like Tesla are compelled to adjust their prices to remain competitive.
Tesla, for example, has reduced the prices of its Model Y SUV and Model 3 by up to 8,000 euros, responding to market dynamics. Similarly, the prices of popular models like the ID 3 electric hatchback and ID 4 electric SUV have also seen reductions. It’s anticipated that prices for all other EVs may follow suit, with projections of 25,000 euro electric cars entering the market within the next year. This market shift could present challenges for owners of first-generation EVs purchased at higher prices, as they contend with depreciating values.
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