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Electric cars are going luxury

Ford, GM, and Honda, as well as startups like Rivian, are muscling their way into the EV market with high-priced pickup trucks and SUVs. 

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  • Nicolas Rivero
By Nicolas Rivero

Tech Reporter based in New York

Published

Hi Quartz members,

The first widely sold electric car in the US was the Nissan Leaf—and it was relatively affordable. In 2011, the Leaf had a sticker price of about $33,600, and accounted for over 95% of the US electric car market.

But the next year, the EV market changed: Tesla introduced its first breakthrough hit, the Model S luxury sedan, which started at $57,400. The Model S soon displaced the Leaf as the best-selling electric car, and Tesla’s luxury vehicles, including the Model 3 sedan and the Model X SUV, today dominate the market.

Tesla’s luxury vehicles, including the Model 3 sedan and the Model X SUV, now dominate the EV market.

There’s no turning back now: A decade after the Leaf’s heyday, EVs are making a marked shift toward luxury. Legacy automakers such as Ford, GM, and Honda, as well as startups like Rivian, are muscling their way in with high-priced pickup trucks and SUVs. They’re also using bigger, more expensive batteries to give their EVs longer range.

More Teslas, more high-end options, and more big batteries are driving up the average price—EV prices these days track closely to the average price of a luxury vehicle.

EV prices these days track closely to the average price of a luxury vehicle.

In the short run, there are enough wealthy car buyers in the US to buy as many electric cars as automakers can produce. Companies like Tesla and Rivian have months- or years-long waitlists. But high prices do deter people from switching to an EV from a gas-powered car. For the US to meet its goal of electrifying all personal vehicles, it will need automakers to roll out more affordable options.


The backstory

  • EV sales are taking off. EVs accounted for 8% of global car sales in 2021—which is still a small fraction of the overall market, but twice as high as their market share in 2020. China leads the world in sales and growth.

The EV-battery price paradox

Since batteries are the most expensive component of an electric vehicle, analysts expected that EV prices would decline alongside battery prices. It hasn’t worked out that way.

Since 2012, the average price to buy a new EV in the US has risen more than 80%, while the average cost of a battery has fallen 80%.

That’s because automakers are rolling out luxury electric cars before developing cheaper, mass-market versions. “It’s very common for automakers to deploy any kind of new technology on more expensive cars first, because [luxury car buyers] can bear the price,” Cox Automotive executive analyst Michelle Krebs explains. Once carmakers ramp up production volume and bring down costs, they introduce those features on more affordable models.


What to watch for next

  1. Honda and GM betting big on cheap EVs.The automakers have each invested billions to create their own EV lines, and in April announced a partnership to jointly develop affordable EVs that will sell for less than $30,000 by 2027.
  1. Metal prices driving up battery costs. Surging prices for nickel, lithium, and cobalt forced battery prices to increase slightly for the first time in a decade last year.
  1. The Ukraine war hitting battery supplies. Russia plays an outsized role in nickel production, and war-related disruptions in that market could slow the transition to EVs.
  1. The US 👀 its battery supply chain. The federal government and private businesses are investing in domestic rare earth mining and battery recycling to blunt the impact of supply chain challenges and geopolitical tensions on battery prices.
  1. Will battery chargers keep pace with EV sales? The construction of new charging stations is lagging behind the growth in EV sales, exacerbating drivers’ anxieties about finding a place to power up.

One 3️⃣ thing

Image copyright: Electra Meccanica
Electra Meccanica’s Solo in action.

Long the punchline of the auto world, three-wheelers are finally having a moment. The compact cars offer electric mobility at a discount price—one model sells for $18,500—and fill a niche between big, bulky electric trucks and tiny electric scooters.

Three-wheelers were the original automobile design: The first one was a steam-powered behemoth built in 1769 to transport artillery. But after it crashed into a stone wall in one of history’s first motor vehicle accidents, engineers gravitated toward more stable four-wheel designs.


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💔  Scam and the city. For decades, an Upper East Side man scammed unsuspecting girlfriends out of money to support his business ventures. “From the outside, it might seem strange that so many people could have fallen for Nelson’s falsehoods,” writes The New Yorker. “But that is the con man’s true art: finding precisely the person who is inclined to believe him.”


Thanks for reading! And don’t hesitate to reach out with comments, questions, or topics you want to know more about.

Best wishes for a high-end weekend,

—Nicolás Rivero, tech reporter

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