[Asia Economy Reporter Jeong Hyunjin] The prices of electric vehicles, whose demand is rapidly increasing worldwide, are rising faster than those of internal combustion engine vehicles due to the surge in raw material costs.
On the 26th (local time), the Wall Street Journal (WSJ), citing global market research firm JD Power, reported that the average price of electric vehicles in the U.S. in May reached $54,000 (approximately 70 million KRW), marking a 22% increase. This significantly exceeds the 14% price increase rate of internal combustion engine vehicles during the same period.
In fact, global electric vehicle companies such as Tesla, Ford, and General Motors (GM) have been raising their electric vehicle prices one after another. GM raised the price of the GMC Hummer electric pickup truck model by $6,250 last week. Currently, the price of this vehicle ranges from $85,000 to $105,000. Tesla's Model Y sport utility vehicle (SUV) price has jumped to $69,000, reflecting a total 9% price increase over three times this year. Ford also announced last week that it would raise the price of the Mach-E SUV to mitigate the cost inflation shock caused by rising raw material prices.
As Ford stated, the main reason for the price hikes by electric vehicle manufacturers is the increase in raw material prices. According to consulting firm AlixPartners, the prices of key electric vehicle raw materials such as lithium, nickel, and cobalt have nearly doubled compared to pre-COVID-19 levels. AlixPartners reported that the average raw material cost for electric vehicles in May was $8,255 per vehicle, a 144% increase compared to the average cost of $3,381 in March 2020. During the same period, raw material costs for internal combustion engine vehicles increased by 106%.
The concerns of electric vehicle manufacturers are deepening. Over the past two years, electric vehicle companies have doubled their investment scale, but with rising costs such as raw materials, their profits inevitably shrink significantly. WSJ stated, "Nevertheless, at present, automotive executives believe that price increases are not enough to harm consumer demand for electric vehicles," adding, "Demand for electric vehicles is exceeding the expectations that manufacturers had when they set prices years ago."
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