Tesla and Other EV Prices Are Going To Plummet

Prices of Electric Vehicles

The price of Tesla vehicles and other electric vehicles are going to plummet, both over the short term, and long term, and there are multiple reasons for this. If you've been paying attention to Tesla prices for all of its vehicles, they have dramatically lowered prices. This is going to continue to happen for all vehicles. It may happen slower for the Model Y, but it is going to happen to all EVs.

There are more than 100 electric vehicle companies in China which are competing with each other. All legacy automakers are talking about the EV fleet they are going to make. Tesla has lowered prices of the Model S and Model X by $10,000 recently. 1 in 3 cars in sold in the world are sold in China.

Scale matters. For a company to break even, they need to make about 500,000 EVs. This is Tesla's specialty, and Tesla is focused on bringing costs down. With Tesla's price cuts and price war, all other EV makers are forced to bring their prices down and follow Tesla's lead.

Can't other companies besides Tesla just keep their prices up? No, they cannot. Economics demands that they have a much more compelling product to keep their prices higher, and they don't. Tesla has the most compelling product in terms of range, performance, safety, software, and functionality. EVs are at price parity with gas cars and still going down in price.

Tesla is leading the drop in EV prices, but even without Tesla doing its manufacturing techniques to reduce cost, the cost of EVs will still go down over time.

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Future Prices Over Time

One of the reasons EV prices are going to go down over time is the cost of the battery for the car. We are at about $138 per kWh of EV batteries right now, and there was a brief rise in price from 2021 to 2023 due to supply chain shortages. These prices are going to go down from here, though.

Battery Costs Over Time Per kWh

The price of Lithium and all the materials for the batteries are going down as more and more companies mine and refine them. There is a price war going on for batteries as well.

Battery companies who are making billions of dollars in profit for batteries can bring down their prices. Then, the EV makers who are using these batteries will pay much less for those batteries.

By 2030, I expect that 1 kWh of batteries will be around $60. By 2040, it's going to be negligible.

All the components for an EV are going to go down in price over time. However, if an EV has software that lets it become autonomous, then that opens up another question on the value of a car.

New models are coming for all vehicles, and Tesla is releasing the Cybertruck later this year. It's a great time to be alive, as cars are turning into phones and going to get better and cheaper over time.

For more information, see this video from the Electric Viking:

In Related News: Tesla Model Y is Big Savings For Police Departments

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News.

Image Credit, Tesla, Screenshot