According to de Meo, 40% of the cost of an electric vehicle can be traced back to batteries. 80% of the battery cost comes from raw materials. He told Autocar that “Everyone is trying to protect their margin. The cost of electric vehicles is still relatively high.”
Lower prices in the USA, coupled with the new $7,500 tax credit, mean more Americans will be able to afford a new electric vehicle and enjoy emissions-free motoring. But, as de Meo has pointed out, this is not a sustainable business model for most EV makers.
So, why can Tesla afford to do this? Well, the brand has famously high profit margins that won’t really be impacted by reduced pricing. If anything, the automaker will attract even more customers in 2023.