MCViewPoint

In the case of EVs, there is the addition force of . . . force.

The regulatory apparat has assured that only the Bespoke’d will be in a position to make – and to buy cars. This no doubt suits the Bespoke’d, who have long resented that the non-Bespoke’d could afford the same as the Bespoke’d crowd could. It is not as distinctive to own a car when anyone can.

Which is ultimately what it’s all about.

https://www.ericpetersautos.com/2023/04/12/the-new-car-as-a-luxury-item/

By eric

New cars sales are way down – by millions of vehicles annually – but that hasn’t caused new car prices to go down accordingly. In fact, they have gone up – a lot. The average price paid for a new car last year was almost $50,000 – which is both a record high and about $15,000 more than it was just three years ago.

Two factors are driving this.

The first is “electrification,” which is expensive. And becoming more so.

There are more expensive EVs on the market now than there were three years ago, when Tesla was pretty much the only one making them in significant numbers. Now almost every car company is making them, because they have to make them. Well, it’s true that they could decide not to make them – but that would take courage, in short supply in corporate boardrooms these days. Instead, the impetus is compliance. Go along to get along – and pretend it will all keep going, somehow.

Which it did – for awhile – for as long as interest rates remained low and inflation did, too.

A six year loan on a $50,000 car was feasible when the cost of money – interest – was essentially nothing. It was almost an investment to take out a loan. But the cost of money is now three times-plus what it was just a couple of years ago, which has made what was feasible and not financially irresponsible increasingly impossible.

A monthly payment that was $600 is now $800 – and the money available to make the payments has diminished in buying power by at least 10-15 percent, courtesy of what is often inaccurately called “inflation” – effectively increasing the actual monthly cost of the loan to nearer $1,000.

This will inevitably reduce new car sales even more as there are fewer and fewer people who can manage the payments on a $50,000 car.