Tesla Bear Says EV Prices Imploded As Supply Outpaced Demand, Even As Cathie Wood Paints A Positive Picture Of Innovation Leading To Deflation

Ark Invest founder Cathie Wood reiterated her view that a deflationary trend is in play, thanks to innovation-induced price declines. One Tesla bear, however, refuted her argument.

What Happened: On Saturday, Wood reposted a post by Sam Korus, director of research autonomous technology & robotics at Ark, in which he shared a graphic from Cox Automotive regarding prices of various categories of vehicles in September.

On a year-over-year basis, most vehicle categories showed modest price growth, except for electric vehicles, and midsize and subcompact SUV/crossover vehicles, according to the chart. EVs saw the steepest drop of 22.4%, while hybrid vehicle prices climbed 20.6%. Overall, vehicle prices fell a modest 0.7%.

Commenting on the price trends, Wood said this is an important example of the price deflation associated with “technologically-enabled innovation” such as battery-pack systems. The fund manager used the data to take a dig at the Federal Reserve.

“The Fed continues to base its decisions on lagging indicators. AI, blockchain technology, robotics, and multiomics sequencing will add to deflationary pressures,” she said.

See Also: Best Electric Vehicle Stocks

Why It’s Important: While consumer price inflation has cooled off from the highs seen in the summer of 2022, it continues to be elevated and well above the Federal Reserve’s target of 2%. The September consumer price inflation data released last week showed the number coming in slightly ahead of expectations.

With the Fed basing the future rate trajectory on how inflation pans out, detractors like Wood blame the central bank for risking a recession by relying on lagging indicators.

Tesla bear Gordon Johnson had a different take on the EV price deflation. Replying to Wood’s post, he said, “Or, maybe, prices for EV are LITERALLY imploding because: demand < supply = lower prices.” Rather than innovation bringing down prices, the demand-supply mismatch could be weighing on prices, he suggested.

The iShares TIPS Bond ETF TIP, an exchange-traded fund that seeks to track the investment results of an index composed of inflation-protected U.S. Treasury bonds, ended Friday’s session up 0.65% at $103.64, according to Benzinga Pro data.

Read Next: Is Federal Reserve ‘Near The End Of Rate Hiking Campaign’? 3 Economists Weigh In On FOMC Minutes

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