By Gary S. Vasilash

In December 2023 18 of the 35 brands that Kelley Blue Book analyzed had year-over-year price declines.

This is understandable, given that it was the end of the year, and there is a tendency for product manufacturers of all types, not just vehicles, to want to move out as much inventory at the end of a period as possible (e.g., the classic recommendation about buying a car at the end of the month when the dealer wants to move just one more to make a quota and consequently provides a better deal).

So there was Volvo, which reduced its price by 6.7% and Land Rover, with a 10.2% reduction.

It should be noted, however, that both of those brands have a very minimal (<1%) share of the U.S. market, so it is not like their combined numbers have much of a consequence on the overall average retail price for vehicles in 2023.

KBB calculated that in December the average transaction price (ATP) for vehicles was $48,759.

Notably, the ATP was $50,798 for electric vehicles.

Said Stephanie Valdez Streaty, director of Industry Insights at Cox Automotive, “2023 was a milestone year with 1,189,051 pure battery electric vehicles sold, accounting for 7.6% of all new-vehicle sales.”

So that is good for the EV producers.

What’s more, the point at which price parity between vehicles with combustion engines and those with electric motors is reached is something considered by industry to be the point at which there will be a huge rise in the number of EVs purchased.*

An ATP difference of $2,039 for an EV is almost that, and certainly just a few bucks per month on a lengthy load.

But going back to the companies that had price cuts in December, there’s the company that accounts for 55.1% of the EV market, Telsa. (Tesla has, per Cox Automotive, 4.2% of the entire vehicle market, which is more than Mercedes, Volvo, Jaguar-Land Rover, Rivian, and Lucid combined.)

According to KBB it cut its prices an average 25.1%.

Let’s see: a price reduction of that magnitude, the possibility of getting as much as a $7,500 tax credit for a Model X or Y—well, were Chevy capable of providing those kinds of benefits to customers Malibus would be flying off lots.

People read books about negotiation strategies in order to get a few percent taken off the price of the vehicle they want to buy, coming in ready to take on the dealer by being wise to its tactics, and there was Tesla, slashing prices, presto-change-o. And the Feds offering serious money, too.

Amazing!

No other OEM can afford to make—or take—the kind of cut that Tesla made.

At some point (let’s not forget about the presidential election in a few months) those tax cuts are going to go away. And Tesla may simply being to ratchet its prices back up.

What then?

Perhaps that parity may be fleeting.

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*Of course, given the continued issue regarding infrastructure, which an increased number of EVs would only exacerbate. . . well, people who have to drive around looking for available, working chargers are not likely to want to repeat that experience when they look for a new vehicle.