EV sales soared in the US in July, with Tesla (TSLA) helping to boost those numbers with the biggest price cuts. The jump in EV sales comes ahead of the federal EV tax credit expiration, with EV demand expected to be strong throughout the third quarter.
Cox Automotive’s Kelly Blue Book estimates EV sales were robust in July, initially estimated to be the second-best month ever, with sales over 130,000 — a 20% jump from a year ago. KBB’s official tally for July will come next week.
But it wasn’t just the tax credit expiration that drove buyers to EVs. It was price cuts.
KBB reports the average transaction price (ATP) for new EVs was $55,689, down 2.2% from June and 4.2% from a year ago.
Tesla, the top EV seller in the US, led the price cuts. Tesla’s July ATP was $52,949, down 2.4% compared to June and sliding 9.1% compared to a year ago. KBB said Tesla incentives in July were higher as well, leading to increased sales compared to June but down year over year. KBB said a higher mix of cheaper base Model 3 sedans and Model Y SUVs pushed overall ATPs lower for Tesla.
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For the industry as a whole, the average incentive package for EVs hit 17.5% of ATP in July, which KBB said was a record in the modern era of EV sales, and up more than 40% compared to last year.
“The urgency created by the administration’s decision to sunset government-backed, IRA-era EV incentives was expected to create serious demand for EVs in the short term,” Cox Automotive senior analyst Stephanie Valdez Streaty said in a statement. “At this pace, Q3 will be the best ever and then some, as buyers jump in before the big incentives dry up.”
As for Tesla, the company’s website shows Model Y wait times in the US stretching to four to six weeks, up from one to three weeks earlier this summer. Tesla also raised lease prices for the Model Y by 14%, suggesting it has some pricing power as demand for the vehicle rises.
The next leg up for Tesla’s demand story may come when the company unveils its so-called cheaper EV, which the company said will come after the federal tax credit expires. Tesla fans were probably not happy to hear that CEO Elon Musk confirmed it would basically be a stripped-down version of the Model Y, not the long-anticipated “Model Q” hatchback that analysts at Deutsche Bank predicted.
Musk himself warned that, following the end of the tax credit, the company would face “a few rough quarters.”
Pras Subramanian is the lead auto reporter for Yahoo Finance. You can follow him on X and on Instagram.
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