If you were to go back in time 120 years, to the dawn of the Age of the Automobile, what you would see is that the automobiles of that age were few and expensive. Most were hand-built, to order (you may recall GM’s “Body by Fisher” badges; these were remnants of the coach-built era).
Anyhow, we’re almost there again.
You may have heard that last year, the average price paid (the so-called “transaction price”) for a new vehicle was about $45,000 – an all-time high. It does not mean that one could not buy a new car for much less; it means that lots of people didn’t – chiefly because they could finance more car – which they could because of low interest rates. But interest rates are no longer low and headed higher; this will result in fewer people being able to finance – ending the fiction of affordability.
At the same time, there are fewer and fewer vehicles left that do not cost $45,000 – or a lot more.
Almost all of this is due to “electrification,” which is inherently expensive. The typical EV costs about $10,000-$15,000 more than an otherwise similar non-electric vehicle. Ford’s F-150 Lightning, for instance, stickers for $55,794 vs. $41,530 for the non-electric F-150 SuperCrew. It costs thousands more this year than it did last year.
Some EVs – like the Tesla Model 3 – sticker for twice what an otherwise similar compact-sized hatchback sedan such as the Honda Civic stickers for.
This will get worse, not better, as more high-cost EVs are force-fed into the mix – and fewer low-cost non-EVs are left, as alternatives to them.
Why will this happen?
In the first place, more EVs will mean more demand (artificial, but real) for non-renewables such as lithium and other vital materials that are simply hard to to get (like Cobalt) and very costly to convert from the raw material to finished product. This is why EVs have become more rather than less expensive over the past year, contrary not only to the saccharine promises made that EV prices would come down and also contrary to the usual pattern wherein something new is more expensive at first but becomes less so over time – in part because it is no longer new and also because as it becomes more common, the cost of making it goes down rather than up.
The Model T Ford is an excellent example of the latter.
But the Model T was designed specifically to be inexpensive and simple. EVs are not. The T was made using abundant materials that did not cost a lot. With EVs, it is the opposite.
And – in the second place – there will be fewer alternatives to EVs, as non-EVs are being systematically forced off the market via regulations and made EV-expensive in the meanwhile.
A good example of this is the new Jeep Wagoneer L I recently test drove and reviewed. The heart of this vehicle is Jeep’s new “Hurricane” in-line six cylinder engine, which replaces the Hemi V8 engine that is being regulated off the market. The new engine has two turbos, liquid intercoolers and a whole slew of additional parts necessary to make it all work – and make the power of a V8 without being a V8.
This is not inexpensive. The Grand Wagoneer L stickers for more than $90,000 to start. Most large SUVs – and not the electric ones – sticker for not much less than that. Try finding one with a base price under $50,000.
They will sticker for more as the pressure to “electrify” waxes, which it will.
The electric ones already sticker for more.
One of the newest examples being the 2024 Kia EV9, a mid-sized, three-row SUV with an anticipated MSRP of $63k (that’s with 260 miles of range).
When there are no longer non-electric alternatives to such vehicles, the last lingering check on the cost of EVs will have been removed, as there will be no other choice. The incentive, then, will be what it already is: To build expensive, ultra-luxurious EVs for the very affluent only. There will be no more market pressure to lower costs; no need to worry about being undersold by competitors.
It will be like it was, with a difference.
At the dawn of the Automotive Age some 120 years ago, vehicles were also expensive and few, an indulgence of the affluent. But only because they were new (EVs are ancient) and only because no one had yet figured out a way to make them less expensive – as Henry Ford did.
Instead, they are being made deliberately more expensive in order to recreate what Henry Ford undid.
The point being to return to the age when cars were for the few – and the rest walked.
If you like what you’ve found here please consider supporting EPautos.
PS: Get an EPautos magnet or sticker or coaster in return for a $20 or more one-time donation or a $10 or more monthly recurring donation. (Please be sure to tell us you want a magnet or sticker or coaster – and also, provide an address, so we know where to mail the thing!)
My eBook about car buying (new and used) is also available for your favorite price – free! Click here. If that fails, email me at EPeters952@yahoo.com and I will send you a copy directly!