The Biden Administration’s goal to have half of all car sales to be electric vehicles by 2030 has driven competition among car makers like Ford to capitalize on the green energy initiative. Thirteen companies announced plans to spend more than $75 billion to open electric vehicle manufacturing plants in six states. By 2025, more than 100 EV models are expected to be on the market and available to U.S. customers, including cars, trucks, and SUVs.
Electric vehicle purchase prices have caused headaches for Americans. Last month, Transportation Secretary Pete Buttigieg was grilled over the Administration’s electric vehicle push. Kelley Blue Book pegged the average cost of an EV at $64,338 and the average cost of a compact car at $26,101 as of May 2022. Buttigieg refuted the statistic, arguing other factors make an EV a similarly affordable option compared to a traditional car.
“What we’re seeing in terms of the dynamics now is we’re close to the point, and may actually be there on certain models and under certain circumstances, where the extent to which your car payment would go up, is actually already outweighed by the extent to which your gas bill would go down, even factoring in the cost of electricity,” Buttigieg said.
But in an economy suffering from high inflation, the cost of materials to make EVs has significantly increased. For example, the battery used inside EVs has doubled in price in the last two years. Those high material costs have driven up EV retail prices.
Ford announced Tuesday the starting price tag for its 2023 F-150 Lightning model increased by $7,000. The starting prices for the 2023 F-150 Lightning will now range from about $47,000 to $97,000, up from roughly $40,000 to $92,000 for the 2022 model year. Prices exclude taxes and shipping/delivery costs.
Ford is not alone when it comes to struggling to produce cheap electric vehicles. Tesla increased its prices this year, too. General Motors announced last month its Hummer EV pickup price would increase by $6,250. EV startups Rivian Automotive and Lucid recorded even higher cost jumps. All companies cited the same driving factor: material cost increases.