Carmakers Sell EVs At Discount As Demand Slows

Carmakers in Western countries have gone from long waiting lists to offering discounts to stimulate demand over the course of this year, according to sales and financial data compiled by HSBC.

The data showed that carmakers are having to offer discounts on electric vehicles for the first time amidst a sharp slowdown in sales growth.

In October UK discounts were on averate 11 percent below the recommended retail price, while in the US they were at 10 percent and in Germany companies were offering roughly 7 percent price cuts on average.

The slowdown, the first since electric vehicle sales exploded in 2020, comes amidst mixed political messages, with the UK pushing back a ban on new petrol cars from 2030 to 2035.

Discounted models

The EU similarly decided earlier this year to allow new petrol cars running on synthetic e-fuels to be sold after 2035.

HSBC said several best-selling electric models were being sold at discount.

In Germany the BMW i4 was being sold at 20 percent off, the MG4 at a 11.5 percent discount and the Dacia Spring at 11 percent off.

In the UK the electric Fiat 500 and Peugot 208e, both from Stellantis, were being sold at more than 22 percent off while the VW ID3 and Skoda Enyaq were being sold at a 12 percent discount.

Electric demand

In the UK two-thirds of new EVs were sold at a discount or with heavily discounted interest rates for financing, according to figures from AutoTrader, which said EVs in the country are on average 33 percent more expensive than fossil-fuel models.

Meanwhile in the US discounts on EVs have tripled in the past 12 months, HSBC found.

Fully electric vehicle sales were up 47 percent in the first nine months of 2023, but Volkswagen said its EV order intake was at half its level a year ago.

In the US Ford and GM recently said they were delaying the launch of cheaper EV models in respose to the slowdown in demand and higher costs, while VW delayed plans for a fourth battery factory citing “sluggish” EV demand in Europe.

Shift to mass market

Alex Smith, head of Volkswagen in the UK, told the Financial Times he sees the slowdown as being partly a sign that the early adopter phase of EVs is coming to an end, bringing with it the challenges of transitioning to mass market consumers that “want a really high degree of rational convincing”.

In the long term, however, HSBC analysts said in a research note on Tesla last week that “EVs are “a growth market and are likely to be for decades”.