Luxury EVs were once seen as spearhead models for the electrification strategy of many automakers but as prices continue to rise and market conditions shift, affordable EVs are rapidly becoming more important.
A new report reveals luxury EV sales are declining as mass-market models see an upswing in sales.
Luxury EV vehicles are typically seen as the spearhead segment for new vehicle technologies with these vehicles often introducing new technology that eventually trickles down to affordable vehicles like heated seats, rear-view cameras, and more. The first wave of EVs came from mostly luxury brands with more affordable options coming shortly after.
However, while luxury EVs still command a large chunk of sales, sales for these EVs have begun to stumble as more customers move away from the pricey models and instead into more affordable options that still give them the high level of technology and EV efficiency they want but at a lower price point.
Luxury EVs see consistent declines in sales
Luxury EVs were once seen as spearhead models for the segment, but the tide has turned in recent years.
According to a report from Kelly Blue Book Luxury EV sales have been declining 5% year-over-year during the last half of 2024 with this trend running in contrast to a broader spike in overall luxury vehicle sales which has seen transaction prices go past the $50,000. This decline is expected to accelerate as the newly installed Trump administration moves to repeal EV credit programs that were meant to encourage customers to buy an EV.
Even the holiday season couldn’t add any steam to sales with Audi, Mercedes, and Lexus all confirming sales of their EVs dipped during that same period of time as the luxury sector continues to grapple with weakening demand for luxury-focused EV products.
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Mass market EVs see a surge in sales
Mass-market products like the Kia EV9 are helping boost sales with many other mass-market brands (except VW) reporting strong sales gains.
While the luxury EV segment has been taking a pummeling in sales, the mass market on the other hand has seen a surge in sales with these vehicles seeing a 21% increase in sales during the same time period with brands like Chevrolet and Kia leading the way in reaching out to these customers. KBB says that many EVs are often $6,000 more than a traditional ICE-powered vehicle. This smaller pricing gap can make some buyers who are averse to buying an EV avoid the luxury segment altogether and go for a more affordable option for their EV purchase.
In addition to Chevrolet and Kia reaping the rewards from an increase in mass-market EV sales, GMC also reported strong growth in the mass-market sector despite the GMC Sierra and Hummer EVs still having price tags that would technically be considered in the luxury sector with the Sierra starting at $89,900 while the Hummer EV starts at a lofty $96,550. The lone exception to this mainstream growth is Volkswagen which reported lower sales. While some of these moribund results were attributed to a stop/sale order on the ID.4 EV, VW has also been plagued by broader production difficulties which have affected how it has launched its lineup of EVs with the I.D. Buzz EV van just now beginning to make its way to dealerships.
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