EV Prices See Big Jump in Recent Days

Officials at GMC revealed today the brand would be the latest to hike up its price on its battery-electric vehicle, the Hummer, raising it by $6,250 for anyone ordering the vehicle after June 18. It’s just the latest EV to see a jump in recent times.

In fact, one only needs to go back one day to see that Tesla instituted price hikes across the board on its vehicles. In the case of GMC, it said it was raising the price of the Hummer pickup and SUV by $6,250. Tesla’s prices jumped 5% across the board, pushing the Model Y long-range from $62,990 to $65,900.

While prices of vehicles have been on the rise for much of the past two years, the check a buyer writes for an EV is substantially larger than the one they cut for an average ICE vehicle. The average mass market vehicle costs a little more than $43,000 while the average EV’s price exceeds $60,000.

Those two price increases follow moves by Rivian in March, which raised prices on its R1T electric pickup and R1S electric SUV by 17% and 20% respectively. Lucid Motors followed suit in May, raising prices as much as 13% for vehicles ordered after June 1.

Why are prices rising?

While gas-powered vehicles are seeing prices increase as well, they’ve been pretty small on average in recent months, coming in at 1% or 2%, but EV price increases have been double digit hits. The reason is pretty straightforward.

“The costs of the components and materials that go into building our vehicles have risen considerably. Everything from semiconductors to sheet metal to seats has become more expensive,” said Rivian founder and CEO R.J. Scaringe in a statement at the time of his company’s price increase.

Those materials include aluminum and lithium for the batteries and components to the semiconductors needed to make the computers needed to run everything. All of them are in short supply as the COVID-pandemic-induced shortage is still impacting the industry and Russia’s invasion of Ukraine has hampered the ability to get other resources.

Does it matter?

There has been some outcry over the price increases, especially in the case of Rivian, which announced it was raising prices immediately, even on vehicles that had already been ordered, but not yet received. The EV maker walked back the move just a day or two later. 

However, some are suggesting the price hikes aren’t changing buyer behavior. Rivian’s CFO, Claire McDonough, told analysts, investors and reporters during Deutsche Bank’s Global Auto Industry Conference that buyers were still buying the company’s more expensive models.

“… leverage as we think about the world of inflation, and the pricing headroom that we believe we have for our vehicles,” she said.

However, there plenty of critics about the high prices that must be paid for an electric vehicle, contending they’re green friendly for the planet — eventually — but not green friendly on the buyer’s bank account. U.S. Rep. Debbie Dingell (D-Michigan) told attendees at the Automotive News Congress in Washington, D.C. Thursday there is a problem with the affordability of EVs.

“If people can’t afford those vehicles,” she said, automakers “are not going to be able to sell them.”

Dingell went on to say more needed to be done to make EVs less expensive, and that partnerships between the public and private sectors are critical to success on that front. She pointed to still-in-limbo incentive plan for buyers as one way to get that done.