After struggling to find enough batteries and other components for the past few years, automakers are finally starting to produce large numbers of electric cars and trucks. More than 30 new models will arrive in showrooms this year.
What they need now is more customers.
While sales of electric cars are on the rise — they climbed about 48 percent in the second quarter from a year ago — they’re not growing fast enough to keep up with the number of cars rolling off assembly lines. And inventories of unsold cars are starting to pile up.
More than 90,000 battery-powered cars and trucks are sitting on dealer lots, four times as many as a year ago, according to Cox Automotive, a market research firm. That’s enough to last 103 days at the current rate of sales, compared to about 50 days for the industry as a whole.
Manufacturers are “having a ‘Field of Dreams’ moment,” said Jonathan Gregory, a senior manager of economic and industry insight at Cox. “They’ve built up EV inventory, but now they’re waiting for buyers to come.”
Because of this supply and demand imbalance, automakers are cutting prices and offering more incentives. On Monday, Ford Motor slashed prices of its F-150 Lightning electric pickup truck by $6,000 to nearly $10,000, or up to 17 percent on some versions. The company also offers discounted interest rates of 1.9 percent to 3.9 percent on some loans for Lightning purchases.
These moves follow a series of price cuts by Tesla, the dominant seller of electric vehicles. Tesla’s price cuts earlier in the day prompted Ford to lower prices of its Mustang Mach-E electric sport utility vehicle, even though it hasn’t brought Mach-E inventory back in line with sales.
At the end of June, Ford dealers had 16,400 of that model in stock — about 2,000 more than they sold in the first six months of the year.
Although many consumers are expressing interest in electric vehicles, they are often not ready to go through with the purchase. Many people have been put off by the high price of electric cars and expect them to cost no more than comparable gasoline models – something the recent price cuts could accelerate.
Other car buyers have concerns about how far these cars and trucks can travel on a full charge. Many models available today need to be recharged after traveling 200 to 250 miles. Uncertainty about finding charging stations and how long it takes to charge cars can put some people off.
Glenn Staub, a personal trainer from White Plains, NY, said he wants to buy a hybrid or fully electric car because of the potential environmental benefits and the savings in fuel costs. But he won’t be on the market until his 2014 Toyota Corolla comes out.
“My policy on keeping cars is that I drive them until they’re no longer usable,” he said. That may not be for a few years; his Corolla has been driven less than 100,000 miles and runs well.
Sales have been particularly sluggish for high-priced luxury models — a market segment with plenty of options from the likes of Tesla, Mercedes-Benz, BMW, Porsche and Lucid Motors. Many of these cars cost $75,000 to $160,000.
“I think there’s a lot of hype about EVs, and people are doing their research and realizing that these are premium vehicles and they’re not cheap,” said Rick Ricart, president of Ricart Automotive, which owns nine new-car franchises in Dublin, Ohio. “And there was some pullback.”
Mr. Ricart said his family’s Ford store has had a top-of-the-line F-150 Lightning Platinum truck for sale for $92,000 for more than two months. “A year ago, it would have been sold now,” he said.
Another group of electric vehicles struggling to find buyers are those that no longer qualify for a $7,500 federal tax credit under the Inflation Reduction Act, President Biden’s ambitious climate change legislation. The credit is only available on cars assembled in North America and with a certain percentage of battery materials from the region or from US trading partners.
In addition to those restrictions, electric sedans must sell for $55,000 or less to be eligible for the credits, and SUVs, pickup trucks and vans must sell for $80,000 or less.
Purchases of Ford’s Lightning trucks can make buyers eligible for a $7,500 credit, and the company plans to sell more of the pickups in the coming months. The company temporarily halted production this year to upgrade its assembly line and increase output. By fall, the company expects the Rouge Electric Vehicle Center near Detroit to be able to produce 150,000 Lightnings a year, triple its current production capacity.
The company’s decision to lower prices may also have to do with growing competition in the electric vehicle business. Tesla said Saturday that it has begun production of its long-delayed Cybertruck pickup, and General Motors is expected to soon begin delivering an electric version of the Chevrolet Silverado truck.
Ford began production of the Lightning in spring 2022 and raised prices several times to a total of about $20,000, citing the rising cost of raw materials for its batteries. At the time, demand far outstripped Ford’s production, and some dealers were charging thousands of dollars more than the company’s suggested retail price.
“Shortly after the F-150 Lightning was launched, rapidly increasing material costs, supply constraints and other factors drove up EV truck costs for Ford and our customers,” said Marin Gjaja, the chief customer officer for the automaker’s electric vehicle division. in a statement. “We’ve continued to work in the background to improve accessibility to help lower prices for our customers and shorten wait times.”
The company’s decision to cut prices did not unnerve investors who feared it would hurt Ford’s profits, and its stock price fell 6 percent on Monday.
Ford says the Pro model of the F-150 Lightning now has a list price of $49,995, a reduction of $9,979. The XLT 312A model with extended battery range is cut by $8,879, to $69,995. The top-of-the-line Platinum extended-range model will sell for $91,995, or $6,079 less than its price last week.
As a result of the price cuts, most Lightning models cost less than $80,000, making them eligible for a $7,500 federal tax credit.