The pace of adoption of smartphones exceeded most expectations by a significant margin. It could be happening to electric cars soon. Thanks to the price cuts led by Tesla last month, many electric car models are now similarly priced to their internal combustion driven counterparts.

“The battery-powered version of G.M.’s Equinox crossover, for example, will start around $30,000 when it arrives this fall, the carmaker has said. That is $3,400 more than the least expensive gasoline-fueled Equinox. But factoring in government incentives, the electric Equinox should be cheaper.

…The first major crack in the trend of rising prices came in January when Tesla cut prices for the Model 3 and Model Y, the two best-selling electric cars, by thousands of dollars. With a starting price of $43,500 before government incentives, a Model 3 is now $300 less than the least expensive BMW 3 Series sedan. A Model Y, at $55,000 before tax credits, costs about as much as a comparable Lexus RX.”

Of course, government incentives such as tax credits on EVs have helped the math in some ways. But given the lower operating (fuel) and maintenance costs of EVs, the total lifetime cost of ownership of EVs has likely dropped below the petrol and diesel counterparts.

Indeed, the tax credits seem to have contributed to these price cuts:
“Major impetus for the price cuts came from the Inflation Reduction Act, legislation passed by Democrats in Congress last year that provides tax credits of up to $7,500 for electric car buyers. To qualify, battery-powered or plug-in hybrid sedans have to sell for less than $55,000, while pickups and sport utility vehicles qualify only if the retail price is below $80,000. By cutting prices, Ford and Tesla increased the number of models that could benefit from the tax credits.

Manufacturers “are working to continue to pull in shoppers by making these vehicles eligible for tax credits,” said Jenni Newman, editor in chief of Cars.com, an online auto sales site.

Potentially more significant are subsidies paid to companies that manufacture batteries in the United States, part of a drive by the Biden administration to establish a domestic supply chain and reduce dependence on China.

The subsidies, which were also part of the Inflation Reduction Act, could cut the cost of making electric vehicles by as much as $9,000. That break and the tax credits for buyers of electric cars could allow battery-powered vehicles to achieve price parity with gasoline cars as soon as this year, according to the International Council on Clean Transportation, a research and advocacy group. That is three to five years sooner than would be the case without incentives.”

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