Al Root
Prices for new cars keep coming down, offering buyers a little relief. But there is little relief for Tesla investors though, as finding new EV buyers is getting more difficult.
On Monday, automotive data provider Kelly Blue Book announced average transaction prices for March. A new car cost U.S. buyers $47,218 last month, down 1% year over year and down 5.4% from the market peak in December 2022. Prices are still up an average $10,454 from March 2019, before the Covid-19 pandemic.
Better supply is part of the reason for the recent drop. New car inventory finished the month at about 2.7 million units, up 52% year over year.
Things are getting a little better for buyers. The Cox Automotive affordability index -- which adjusts for vehicle prices, income, and interest rates -- came in at 37.1 in March, down about 10% from peak levels, but up about 10% from typical levels from before the pandemic.
The average battery-electric vehicle cost $54,021 in March, down about 10.5% year over year. Telsa's price cuts are the main reason EVs are cheaper.
Competition for EV buyers remains fierce. The average incentive offered by Tesla equaled almost 12% of average transaction prices in March. That's almost twice as high as the average 6.6% incentive rate for the market as a whole.
Other EV manufacturers are following suit. Incentives at Polestar and Lucid both came in around 14% of average transaction prices.
The struggle to find new EV buyers is showing up in overall results. Americans bought about 8% more EVs in the first quarter of 2024 than they did in the first quarter of 2023. That rate was a sharp deceleration from the 40% growth experienced in the fourth quarter.
New EV inventory ended March at about 91 days of sales, according to Cars.com. That's about 30 days higher than inventory levels for the overall American auto market.
Tesla stock is down 2.9% in early trading at $156.82 on Tuesday, while the S&P 500 rose 0.1% and Nasdaq Composite fell 0.2%. Investors are still digesting what lower growth means for the company. Monday, investors learned Tesla is laying off about 10% of its 140,000-strong global workforce.
Lucid shares were down 2.7% in early trading. Polestar shares fell 1.1%.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
April 16, 2024 10:25 ET (14:25 GMT)
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