Electric car prices rise at Tesla, Rivian, GM and other automakers

Automakers from Tesla to Rivian to Cadillac are raising the price of their electric vehicles amid changing market conditions and rising commodity prices, especially key materials needed for electric vehicle batteries.

Battery prices have been on the decline for years, but that could change soon. One firm is predicting a surge in demand for battery minerals over the next four years, which could push prices of electric vehicle battery cells up to more than 20%. This is on top of already rising raw material prices for batteries as a result of supply chain disruptions linked to Covid and Russia’s invasion of Ukraine.

Higher costs are forcing some EV manufacturers to raise prices, making already expensive cars even less affordable for the average American, and the question is, will rising raw material prices slow down the EV revolution?

Industry leader Tesla has been working on reducing the cost of its vehicles for years, which is part of the “secret master plan” promote the global transition to zero-emission transport. But even it has had to raise prices several times over the past year, including twice in March after CEO Elon Musk warned that both Tesla and SpaceX were “seeing significant recent inflationary pressure” in commodity prices and transportation costs.

Most Teslas are significantly more expensive now than they were at the start of 2021. The cheapest version of the Model 3, Tesla’s most affordable car, the “standard range”, now starts at $46,990 in the US, up 23% from $38,190 in February 2021.

Rivian was another pioneer in raising prices, but his move was not without controversy. On March 1, the company said that both of its consumer models, the R1T pickup truck and the R1S SUV, will receive significant price increases effective immediately. R1T will jump 18% to $79,500 while R1S will jump 21% to $84,500, he said.

At the same time, Rivian announced new cheaper versions of both models with fewer standard features and two electric motors instead of four, priced at $67,500 and $72,500 respectively, close to the original prices of their more luxurious four-motor siblings.

The adjustments caused bewilderment: At first, Rivian said the price increase would apply to orders placed before March 1 as well as new orders, essentially doubling the money for existing reservation holders. But two days later, CEO R.J. Scaringe apologized and said Rivian would honor the old prices for orders already placed.

“Having spoken to many of you over the past two days, I fully understand and acknowledge how upset many of you have been,” Scaringe wrote in a letter to Rivian’s stakeholders. “Since we originally set our pricing structure, and especially in recent months, a lot has changed. Everything from semiconductors to sheet metal to seats has become more expensive.”

The Lucid Group also passes on some of those higher costs to wealthy buyers of its expensive luxury sedans.

On May 5, the company said it would raise prices on all but one version of its Air luxury sedan by around 10-12% for U.S. customers who book on or after June 1. Lucid CEO Peter Rawlinson has assured customers that Lucid will honor current pricing for any bookings made before the end of May.

Customers booking Lucid Air on or after June 1st will pay $154,000 for the Grand Touring version, compared to $139,000; $107,400 for the Air in Touring trim, up from $95,000; or $87,400 for the cheapest version called Air Pure, up from $77,400.

The price of the new top-of-the-line trim announced in April, the Air Grand Touring Performance, is unchanged at $179,000, but despite similar performance, it’s $10,000 more than the limited-edition Air Dream Edition it replaced.

“The world has changed dramatically since we first announced Lucid Air in September 2020,” Rawlinson told investors during the company’s earnings call.

Well-known global automakers have greater economies of scale than companies like Lucid or Rivian and have not been hit as hard by rising battery-related costs. They also experience some price pressure, although they pass the costs on to buyers to a lesser extent.

General Motors on Monday raised the starting price of its Cadillac Lyriq EV crossover, raising new orders by $3,000 to $62,990. The increase does not include sales of the initial debut version.

The Lyriq and F-150 Lightning are new products with new supply chains that are – for now – exposing automakers to rising commodity price risks. But on some older electric vehicles such as the Chevrolet Bolt and Nissan Leaf, automakers have managed to maintain modest price increases despite higher costs.