With electric cars becoming increasingly popular around the world, many are wondering whether they will ever be an affordable option for regular individuals. To lower our dependency on petrol and diesel, making EVs affordable is a necessary step, but is this realistic? Will your average EV ever fall to the same price as your average ICE?
How Costly Are EVs Compared to ICEs?
There’s no denying that there are many expensive ICEs out there today. Four-wheel drives, sports cars, and luxury models can easily exceed the six-figure mark, making them inaccessible to most. But there’s a reason why so many of us still have ICEs, and that’s price.
Let’s take a look at the price of some popular EVs to further understand this.
Tesla Model Y
From $46,000
Tesla Model X
From $79,900
Tesla Model S
From $74,900
Nissan Leaf
From $28,000
Chevrolet BOLT
From $26,500
From $58,000
There’s a big variation in prices here, but none of the models listed are particularly cheap. Most people cannot afford to pay over $40,000 for a car, especially without some form of financing for monthly repayments. But this is only the price for a mid-range EV. As you’re able to see above, the Model S and X will cost you over $70,000, a very hefty price for a car, and this isn’t even how pricey things can get. But today, we’ll be focusing on mid-range EVs instead of luxury models.
According to aStatista study, the average price of a new EV is predicted to remain above $50,000 until at least 2028. However, the same study reveals that the average price has come down by two to three thousand dollars since 2018. Be that as it may, it still leaves electric cars at a fairly high average price point.
Why Are EVs So Expensive?
The costly nature of EVs comes down to a few key factors, but the cost of battery materials and production is the biggest pointer here.
Your typical EV battery will likely contain a few of the following metals: lithium, nickel, cobalt, graphite, aluminum, and manganese. Sourcing these metals often involves mining or extraction, two processes with very high running costs. Paying for personnel, equipment, and transport of the metals costs a lot, and it’s this overhead that needs to be factored into the market price of an EV.
But it doesn’t stop at sourcing. Once the metal has been mined or extracted, it then needs to be manufactured into an EV battery, along with the other required materials. This involves yet another costly process, which is also factored into the vehicle’s market price. As reported byAllied Market Research, the EV battery industry alone was worth $23.8 billion in 2023 and is set to hit over $108 billion by 2031. This isn’t just due to EV battery demand; the price of this essential hardware is also playing a big role.
Different types of EV batteries vary in their production cost. One battery can cost as little as $5,000 to manufacture, but another could hit five figures. According toBloombergNEF’s findings, the price of a lithium EV battery in 2022 was around $151 per kilowatt-hour (kWh). This showed a seven percent rise from 2021, and the price was expected to increase by a dollar per kilowatt-hour in 2023.
Given that the average EV battery has a power output of around 40 kWh, a 2023 EV battery costs over $6,000 to produce.
EV batteries are also expensive to replace. After so many years, an EV battery will degrade in its performance, meaning the vehicle needs a new battery fitted. As you can see in theRecurrent Auto diagrambelow, replacing an EV battery can range from $2,500 to $23,442, depending on the make and model of the car.
Even the lower end of this range is out of the question for some, as not everyone has a few thousand dollars lying around for a battery replacement. But as you head up the scale, thecost of EV battery replacementbecomes incredibly steep, to the point that only an incredibly wealthy individual would be able to front the bill.
Check out our guide onTesla battery replacement costsif you’d like to learn more about this manufacturer’s fees.
Many electric car brands also incorporate other more advanced technology, such as AI hazard awareness, internet access, and even car-to-car communication. With snazzier features often come snazzier prices, as is the case for most tech-based products.
Will EVs Ever Be as Affordable as ICEs?
As previously discussed, the price of EVs has come down slightly over the past few years. But a drop of a few thousand dollars every half-decade isn’t enough to make these vehicles affordable to regular folk. Many of us have between $10,000 and $30,000 to spend on a car, and buying the cheapest EV possible may come back to bite you if the mileage range and features are lacking.
If or when EVs can be bought for a similar price as ICEs, it will be known as EV parity. In other words, both sides will be equal (or at least relatively equal) in vehicle cost.
Looking at the data, it seems that there is an effort to bring down the cost of EVs to achieve parity with ICEs. In a 2023 interview for CNBC, GM CEO Mary Barra stated that GM is “on track for 2025 to be in that low mid-single digits” range when it comes to its own range of EVs. Barra also stated that GM’s EVs will be at parity with ICEs later this decade.
According to Barra, much of this plan to lower EV prices will rely on the improvement of “battery chemistry,” meaning there will be a focus on getting more cost out of each EV battery.
It’s evident that EV manufacturers want to lower battery production costs, but this may take some time. So, while we wait for this EV-ICE cost parity across the industry, let’s discuss which EVs are more affordable right now.
What Are the Most Affordable EVs?
If you want a cheaper EV, you probably want to steer clear of Tesla. At the moment, even the cheapest Tesla, the Model 3, retails at over $40,000, which is a much higher figure than some other options out there. There are plenty ofTesla alternatives to consider, with some being much cheaper.
Themost affordable EVs on the markettoday are as follows…
Before committing to any purchase, make sure you’ve considered whether the EV you’re considering is right for you.
EVs May One Day Level ICEs in Price
It seems the day is coming when electric cars and petrol and diesel cars meet each other in price, though it may be some years before we see this happen. If you’re considering buying an EV but want to stick to a budget, consider the models listed above while also ensuring that your prospective choice offers what you need for a pleasant driving experience.
