Why 2022 is the year to buy your first luxury electric car

Automakers have spent the past year announcing plans for electric vehicle models and production facilities. That makes 2022 a year when growing numbers of consumers will be weighing whether it’s time to buy their first EV. Is it worth taking the plunge?
That probably depends on the price point and market segment you’re considering. My view is that the higher your price point, the more you should think about buying an EV now rather than waiting another couple years. Here’s a couple reasons why: First, automakers are launching their higher-end models before down-market ones, so the selection is better at the top end. There’s also the tricky proposition of thinking through residual values for used vehicles in the future — demand for gasoline-powered cars will be shrinking, so buying a new one now means it will be worth a lot less by the time you’re ready to trade up.
It’s important to keep in mind that much of consumer behaviour stems from automakers’ actions. Manufacturers have gotten the message from investors that they’ll be rewarded for accelerating the transition to electrics, while profits from gasoline-powered vehicles will serve mostly to fund those investments. The major automakers, following Tesla Inc.’s lead, are starting with higher-end models both because that’s where consumer demand is strongest and because it’s easier to be profitable at higher price points while sales volumes remain far below gasoline vehicles.
Adding to temptation for consumers, industry tastemakers are giving these new, pricey EV models high marks. MotorTrend magazine named Rivian’s $74,000 R1T its truck of the year, and the even more expensive Lucid Air its car of the year. Both vehicles recently started consumer deliveries and have lengthy waiting lists.
Maybe you’re impressed by what you’ve seen so far, but would rather wait a little longer until EV infrastructure like charging stations are more built out. But the value calculation for buying any new vehicle includes what it will be worth years later when you’re ready to trade it in or sell it. The average length of time drivers hold onto new vehicles is 6 years. So if you’re buying a new vehicle in 2022, you should be thinking about the market for used cars in 2028 or later.
Looking out to 2028, when the overall market share of EVs in the US might be as high as 30%, the majority of affluent younger and middle-aged consumers might be purchasing electric cars and trucks.
For utilitarian, budget-conscious car buyers, there’s still reason to be confident that a new gasoline-powered vehicle bought in 2022 will retain a decent value in the used market towards the end of the decade. But for affluent consumers, it’s less of a sure thing.
—Bloomberg