Fisker, the luxury electric vehicle manufacturer based in California, has announced a price reduction for its all-electric Ocean SUV. The move is aimed at generating more demand for the higher-priced trim before the company raises costs for its more affordable options in 2024.
According to Fisker Chairman and CEO Henrik Fisker, the price adjustments are necessary to address competition and respond to market realities in the rapidly-growing electric vehicle (EV) industry. The company aims to make the Ocean SUV more accessible to customers, highlighting its innovative features, striking design, sustainable materials, and impressive range.
As part of the price changes, the Fisker Ocean Extreme, the highest-priced trim level of the Ocean series competing with the Range Rover Evoque, will see a reduction of $7,500, bringing the price down from $68,999 to $61,499. This price adjustment is effective immediately and applies to customers who have already ordered or purchased the model.
However, Fisker plans to increase the prices of other Ocean trims when it unveils its 2024 models on November 6. The Ocean Ultra will see a $3,000 increase from $49,999 to $52,999, and the Ocean Sport will have a $1,500 increase from $37,499 to $38,999.
Mr. Fisker expressed confidence in the continued demand for the Ocean SUV, particularly for the Sport and Ultra models starting in 2024. He expects that the higher pricing of these models, combined with cost-reduction initiatives and lower input prices, will support the company’s projected profits without impacting overall margins.
In the EV industry as a whole, prices have decreased by nearly 20% this year as companies strive to compete with Tesla’s lower price points and convert more gasoline vehicle owners to EVs. The average sales price for an EV was $53,469 in July, down from over $61,000 in January, according to Kelley Blue Book.
Meanwhile, Tesla has also reduced its prices, offering the Model 3 at an entry-level cost of $38,990 and the Model Y at $45,990.
Although EV sales are growing, they remain slower than anticipated, posing a challenge to the Biden administration’s goal of increasing the adoption of EVs. To achieve the administration’s target of up to 60% EVs by 2030 and 67% by 2032 with stricter emissions regulations, the industry would need to significantly accelerate its current growth pace.
In the second quarter of this year, EVs accounted for 9.1% of all new light-duty vehicle sales, which is up from 8.6% in Q1 and 6.6% in Q2 of 2022. However, at the current rate, it would take over two decades to reach the 60% threshold desired by President Biden within the next seven years.
Buyers of EVs can benefit from tax credits of up to $7,500 per vehicle under the Democrats’ Inflation Reduction Act.
In addition to higher prices for EVs, the limited availability of public charging stations remains a barrier to widespread EV adoption. With only around 140,000 public charging outlets for 3.7 million EVs, there is a ratio of 26 EVs per charger, according to the Alliance for Automotive Innovation. To fully transition from gasoline-powered vehicles, a ratio of one public charging port per seven EVs will be needed, as stated by the California Energy Commission.
In conclusion, Fisker’s decision to reduce the price of its SUV aims to drive up demand, while also acknowledging the competitive landscape of the EV market. The company anticipates future price increases for certain trim levels as it unveils its 2024 models. However, the industry as a whole continues to face challenges in meeting the ambitious EV adoption goals set by the Biden administration and addressing the need for more public charging infrastructure.
