Comparing Cars in a Volatile Market
Current State of the Car Market
The automotive industry is one of the largest operations in the country. With the coronavirus and the Russia-Ukraine conflict both causing supply chain distribution issues, the amount of new cars being produced is at a low. From May 2021 to May 2022, there’s been a 20.9% decrease in retail sales of new vehicles. People want to buy cars, but the inventory of cars is limited, causing prices to increase because demand > supply. The inventory is limited because of the microchip shortage. During the pandemic, the microchip factories were closed due to Covid safety protocol. Microchips, also known as semiconductor chips, are a key ingredient in digital devices. In cars, they can be found in the screens, airbags, seat belt tensioners and many other components. Without semiconductor chips, cars can’t be finished, which means they can’t be purchased. This increases the buying of used cars because older models have finished parts. This leads to the demand for used cars to increase, ultimately increasing their price. Although used car prices are higher than before, this won’t last forever. As soon as car companies can overcome their supply shortage, buying used cars will become more affordable again. This is because people will revert back to buying new cars.. This leaves many consumers with the question “a used car, a new electric car or a new gas car?”
Electric Cars: Pros and Cons
A shortage in raw materials has caused a halt in the electric car industry. The raw materials needed to make electric car batteries have doubled in price since the pandemic. These materials include cobalt, nickel and lithium, all of which are essential for making fuel efficient batteries. Due to increases in production prices, companies like Tesla and Lucid have increased the price on their vehicles. In May 2022, the average price of raw materials per vehicle grew 144% since March 2020. Electric cars are getting more expensive, but at least consumers save money on gas. The average cost for fueling an electric car was $ $485 a year, while the cost for a gas-powered car was $1,117. Using a battery to fuel the car seems to benefit consumers' wallets, but are these batteries necessarily better? Electric car companies brand their products as renewable green energy but the raw materials used to construct their batteries have been linked to environmental problems. Mining cobalt has affected local communities near the mines, exposing them to the hazardous cobalt and other metals. The cobalt is mostly mined in the Democratic Republic of the Congo. That is where 70% of the world's cobalt is mined. The mines are unregulated and expose their workers to unhealthy conditions, with little to no protection while mining. Electric cars are still flawed, but they continue to get greener each year. Hopefully if companies perform responsibly, electric cars will be the key to a green future. They are still significantly less harmful than cars that use gasoline. Although they cost more to buy, they save money in the long run.
Gas-Powered Cars: Pros and Cons
Due to a low supply of crude oil, gas prices have increased 96% in the last year. For owners of cars that use gasoline, this has been tough. Gasoline fueled cars release harmful carbon dioxide emissions and contribute to toxic waste because leftover oil and fuel isn’t biodegradable. Due to these cars’ strain on the environment, Gavin Newsom, governor of California, has ordered an end to the sale of gasoline fueled cars by 2035. Many people will need to look to other alternatives. By 2035, new gasoline powered cars will be outlawed. As a customer looking for a car, one should consider this policy. Many states are planning on enforcing this rule, meaning buying a gasoline fueled car may be less efficient in the long run. Buying an electric car may be worth it from this perspective. On the other hand, gasoline cars are easier to access because more companies make gasoline cars. In addition, gas stations are easier to access than electric charging stations. On the contrary, electric cars can be fueled at home. Weighing the pros and cons between both types of cars is important. Both have their strengths and weaknesses.
Used Cars: Pros and Cons
Imagine an option that was better for the environment and at a lower cost. Buying a used car saves money while being better for the environment, since no new parts need to be made. Vehicle manufacturing is a large contributor to harmful emissions entering the atmosphere. With a used car, at least it's recycling someone's old car. This means a consumer isn’t ordering a new car to be manufactured, avoiding further environmental harm. At the end of 2021, the average used car sold for $28,205. Buying a new car during the same time cost over $47,000. Due to low inventory of new cars, many people have started buying used cars. This is beneficial because people are recycling others' old cars. Now, there's a short supply of used cars, too. This causes prices to rise. Although these cars are a lot cheaper now, the prices are rising each year. At the end of 2020, the used car prices were 28% lower than at the end of 2021. To make matters worse, from the beginning of 2021 to the beginning of 2022, the prices increased 40.5%. Selling a used car at this time would be a smart way to make profit. Yet, finding one to buy may serve a challenge.
Conclusion
To conclude, all car types have their benefits and drawbacks in today's market. A low inventory of cars causes added pressure affecting gasoline cars, electric cars and used cars. When looking to buy a car, one must consider all the factors including current events. Customers need to weigh the pros and cons for themselves and figure out what really matters to them. It could be the mileage, the price, the model, the environmental impact or anything else. Every year the car market changes and prices fluctuate, so it's important to understand the current situation whenever buying a car.