Electric vehicle prices rise at Tesla, Rivian, GM and other carmakers
Tesla’s Model 3 at the Tesla store in Washington, DC
Salwan Georges | The Washington Post | Getty Images
Automakers from Tesla to Rivian to Cadillac are hiking prices on their electric vehicles amid changing market conditions and rising commodity costs, specifically for key materials needed for EV batteries.
Battery prices have been declining for years, but that may be about to change. One firm projects a sharp increase in demand for battery minerals over the next four years that could push the price of EV battery cells up by more than 20%. That’s on top of already-rising prices for battery-related raw materials, a result of supply-chain disruptions related to Covid and Russia’s invasion of Ukraine.
The higher costs have some electric vehicle makers boosting their prices, making the already-expensive vehicles even less affordable for average Americans and begging the question, will surging commodity prices slow the electric-vehicle revolution?
Passing costs on
Industry leader Tesla has worked for years to lower the costs of its vehicles, part of its “secret master plan” to promote a global shift to zero-emissions transportation. But even it has had to raise its prices several times over the last year, including twice in March after CEO Elon Musk warned that both Tesla and SpaceX were “seeing significant recent inflation pressure” in raw materials prices and transportation costs.
Most Teslas are now significantly more expensive than they were at the beginning of 2021. The cheapest “Standard Range” version of the Model 3, Tesla’s most affordable vehicle, now starts at $46,990 in the US, up 23% from $38,190 in February 2021.
Rivian was another early mover on price hikes, but its move wasn’t without controversy. The company said on March 1 that both of its consumer models, the R1T pickup and R1S SUV, would get hefty price increases, effective immediately. The R1T would jump 18% to $79,500, it said, and the R1S would jump 21% to $84,500.
Rivian at the same time announced new lower-cost versions of both models, with fewer standard features and two electric motors instead of four, priced at $67,500 and $72,500 respectively, close to the original prices of their plusher four-motor siblings.
The adjustments raised eyebrows: At first, Rivian said that the price hikes would apply to orders placed before March 1 as well as to new orders, essentially doubling back to existing reservation holders for more money. But two days of pushback later, CEO RJ Scaringe apologized and said Rivian would honor the old prices for orders that were already placed.
“In speaking with many of you over the last two days, I fully realize and acknowledge how upset many of you felt,” Scaringe wrote in a letter to Rivian stakeholders. “Since originally setting our pricing structure, and most especially in recent months, a lot has changed. Everything from semiconductors to sheet metal to seats has become more expensive.”
Lucid Group is also passing on some of those higher costs to the well-heeled buyers of its expensive luxury sedans.
The company said on May 5 that it will raise the prices of all but one version of its Air luxury sedan by about 10% to 12% for US customers who place their reservations on or after June 1. Perhaps mindful of Rivian’s about-face, Lucid CEO Peter Rawlinson assured customers that Lucid will honor its current prices for any reservations placed through the end of May.
Customers making reservations for a Lucid Air on June 1 or later will pay $154,000 for the Grand Touring version, up from $139,000; $107,400 for an Air in Touring trim, up from $95,000; or $87,400 for the least expensive version, called Air Pure, up from $77,400.
Pricing for a new top-level trim announced in April, the Air Grand Touring Performance, is unchanged at $179,000, but — despite similar specs — it’s $10,000 more than the limited-run Air Dream Edition it replaced.
“The world has changed dramatically from the time we first announced Lucid Air back in September 2020,” Rawlinson told investors during the company’s earnings call.
The established global automakers have greater economies of scale than companies such as Lucid or Rivian and haven’t been hit quite as hard by rising battery-related costs. They, too, are feeling some pricing pressure, though they’re passing on the costs to buyers to a lesser degree.
General Motors on Monday raised the starting price of its Cadillac Lyriq crossover EV, bumping new orders by $3,000 to $62,990. The increase excludes sales of an initial debut version.
Cadillac President Rory Harvey, in explaining the hike, noted the company is now including a $1,500 offer for owners to install at-home chargers (although customers of the lower-priced debut version will also be offered the deal). Hey there cited outside market conditions and competitive pricing as factors in raising the price.
GM warned during its first-quarter earnings call last month that it expects overall commodity costs in 2022 to come in at $5 billion, double what the automaker previously forecast.
“I don’t think it was one thing in isolation,” Harvey said during a media briefing Monday in announcing the price changes, adding the company had always planned to adjust the price tag after the debut. “I think it was a number of factors taken into account.”
The performance and specifications of the new 2023 Lyriq are unchanged from the debut model, he said. But the price increase puts it closer in line with the price of the Tesla Model Y, which GM is positioning the Lyriq to compete against.
Rival Ford Motor has made pricing a key part of its sales pitch for the new electric F-150 Lightning pickup. Many analysts were surprised last year when Ford said that the F-150 Lightning, which recently started shipping to dealers, would start at just $39,974.
Darren Palmer, Ford vice president of global EV programs, said the company plans to maintain the pricing — as it has so far — but that it’s subject to “insane” commodity costs, like everyone else.
Ford last month said it expects $4 billion in raw material headwinds this year, up from a previous forecast of $1.5 billion to $2 billion.
“We’re going to still keep it for everybody, but we’ll have to react on commodities, I’m sure,” Palmer told CNBC during an interview earlier this month.
If the Lightning does see a price increase, the 200,000 existing reservation holders are likely to be spared. Palmer said Ford took note of the backlash against Rivian.
Established supply chains
The Lyriq and the F-150 Lightning are new products, with new supply chains that – for the moment – have exposed the automakers to rising commodity prices. But on some older electric vehicles, such as the Chevrolet Bolt and Nissan Leaf, the automakers have been able to keep their price hikes modest despite the higher costs.
GM’s 2022 Bolt EV starts at $31,500, up $500 from earlier in the model-year, but down about $5,000 compared with the previous model year and roughly $6,000 cheaper than when the vehicle was first introduced for the 2017 model-year. GM has not yet announced pricing for the 2023 Bolt EV.
Nissan said last month an updated version of its electric Leaf, which has been on sale in the US since 2010, would maintain similar starting pricing for the vehicle’s upcoming 2023 models. The current models start at $27,400 and $35,400.
Nissan Americas chairperson Jeremie Papin said the company’s priority around pricing is to absorb as much of the external price increases as possible, including for future vehicles such as its upcoming Ariya EV. The 2023 Ariya will start at $45,950 when it arrives in the US later this year.
“That’s always the first priority,” Papin told CNBC. “That’s what we’re focused on doing … it’s true for ICE as it is for EVs. We just want to sell cars at a competitive price and for their full value.”