June 15, 2024

Falling prices for new cars have also pushed down prices for used EVs. They have fallen 17 percent since July, according to Recurrent, which tracks the used-car market. That’s largely because Tesla cut the price of the Model 3 last year, while GM cut the price of the Chevrolet Bolt by nearly $6,000. Used cars also qualify for a tax credit of up to $4,000 under the Reduce Inflation Act. This is important because most people buy used cars.

Falling prices for materials such as lithium and cobalt have also helped. The price of lithium used in batteries has fallen 20% from a peak in November, but the metal is still more than twice as expensive as it was at the end of 2021. The price of cobalt has more than halved since May, in part because automakers are selling some models that don’t need it, reducing demand.

New lithium mines are starting to produce ore, which could cap prices. Sigma Lithium will begin shipping raw materials from a plant in Brazil to its main customer, LG Energy Solution, as early as April, Chief Executive Ana Cabral Gardner said in an interview. The site will be the first new lithium resource in Latin America in several years. “It’s doable, we’re there,” Ms Cabral Gardner said.

Of course, these advantages may be lost due to new supply chain problems. Lithium is still in short supply and prices could surge again. Starting next month, new rules on a $7,500 tax credit will require electric vehicle batteries to be produced in the U.S., Canada or Mexico using raw materials from North America or other U.S. trade allies. It’s unclear how many vehicles will meet those requirements.

Vehicles assembled in North America are currently eligible for a tax credit under the Inflation Relief Act, which somewhat shields U.S. automakers from rivals such as Hyundai. The company’s Ioniq 5 sold well, but it was imported from South Korea. Hyundai is building a factory in Georgia that will begin assembling electric vehicles in 2025. (Buyers still get an indirect tax credit if they lease a foreign-made EV.)

The Treasury Department, which enforces the Lower Inflation Act, bowed to lobbying from the auto industry this month and classified several popular crossovers as SUVs rather than sedans.This enables vehicles such as the Mustang Mach-E and all versions of the Model Y to qualify for tax credits If they sell for $80,000 or less. Before then, the Mustang and the lighter Model Y were classified as sedans with a $55,000 limit.

The decision removes some pressure on automakers to keep prices low. Tesla quickly raised the price of the Model Y by $2,000. Ford said it has no plans to increase the price of the Mach-E.

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