Electric cars are expensive and seem unattainable to many. With their exciting designs and novel ideas, it is something that seems out of reach. We hope that one day we will be able to get into an electric vehicle that, although expensive, would save us money in the long run. Well, that day may be closer than many of us think.
Recent research from Bloomberg New Energy Finance is showing that as soon as 2025, electric cars will cost less than traditional gas-powered vehicles. Due to battery prices falling, electric cars will soon be more affordable. They are predicting this trend in the United States and Europe.
Electric cars seem like a luxury item and something that people in the middle class may never be able to get their hands on. But, with the changing economy and the lowering prices for supplies, the middle class may be able to get into an electric car sooner than anticipated. The price to manufacture vehicles is becoming less expensive, and soon as consumers, we will be able to reap the benefits.
Why Are Electric Cars So Expensive?
Electric cars are expensive to the consumer because they are costing the manufacturer a lot to produce. The most expensive component on an electric car is the battery. Right now, the battery is about half the cost of manufacturing the vehicle.
Another reason that they are so expensive at this point in time is that the technology for the electric vehicle is still fairly new compared to the gas-powered vehicle. The combustion engine on a gas-powered car has been around for over 100 years. That is plenty of time to develop an efficient and cost-effective way to manufacture a vehicle. The longer the technology for electric vehicles is around, the more time the manufacturers have to develop more cost-effective ways to produce the vehicle.
Lastly, they are so expensive because they are produced in smaller numbers. GM, Ford, BMW, and the like have the cost-savings power of economy of scale. Gas-powered vehicles are produced in bulk, and they have materials that are much more easily sourced and cheaper when purchased in bulk.
Why Are Electric Cars Getting Cheaper?
The price to manufacture electric vehicles is getting cheaper. As mentioned before, the battery is the most expensive part of an electric car, and the prices for batteries are estimated to decrease by 77% in the coming years.
The battery in an electric vehicle is produced with precious metals and raw materials that are not readily available, but are becoming more accessible and becoming more cost-effective to purchase. The Tesla Gigafactory is an example of increasing battery production while reducing the manufacturing costs. With cheaper parts, the vehicles will cost less to produce.
Once the price of production drops, the manufacturer will start to drop sales prices. In doing so, they will reach a much larger demographic than before and will increase sales. In turn, that will start to cut prices even more, as they will start producing even more.
Suddenly, the cars that were so unattainable before are then the same price range as the typical gas-powered vehicle.
Because electric vehicles are getting more popular and there is a higher demand, many companies are exploring options to expand their current production. Tesla is the largest company producing electric vehicles, and they are planning on opening new facilities and increasing production.
The larger-scale production, in turn, will bring the cost of purchase down. Alternatively, other manufacturers that focus on gas-powered vehicles are now expanding and starting to create more electric or hybrid electric vehicles.
How Cost-Effective is an Electric Car?
Data from a study as recent as 2018 shows that the average cost to operate an electric vehicle is about $485 per year. The same study showed that gas-powered vehicles cost, on average, $1,117 to operate per year. These costs reflect electricity vs. gas, but it is a little more difficult to fully calculate the cost to operate the electric vehicle. Since you do have to plug your vehicle in at home, that energy cost is getting put on top of your home electric bill, so it’s a bit different than just adding up your gas receipts.
Vehicle maintenance is another big factor in owning a vehicle. Surprisingly, it is less expensive to maintain an electric vehicle than it is a gas-powered one. The cost mainly comes down to the engine maintenance:
- Oil changes
- Belt changes
- Filter changes
- Coolant or Transmission fluid changes
Because elective vehicles have electric engines, they don’t have to deal with the above issues that arise from a combustion engine.
You will still have typical maintenance items like wiper blades, brake pads, tires, and insurance. But you wouldn’t have the trouble of extra maintenance or routine oil changes. The one possible downfall is if the battery were to go out. If you don’t have an extended battery warranty, that can be a devastating cost, although it is extremely unlikely for that to happen.
Related article: Do Electric Cars Lose Range Over Time? Here is the Data
What Are the Pros and Cons of Electric Cars?
When we shop for cars, we always want to make sure that we are picking the right one for our lifestyle and budget. There are pros and cons with every vehicle, and when it comes to choosing between an electric vehicle and a gas-powered vehicle, there are many differences to consider.
|Environmentally friendly||Expensive to purchase|
|No loud engine noise||Short battery range|
|There is a potential tax credit||Fast charging is not available everywhere|
|Easier and cheaper to maintain||Not many different options to choose from|
|Often times are more powerful and faster||You have to wait for a charge rather than filling up a tank in 10-minutes.|
Like with any vehicle, we do need to weigh the pros and cons to see what would best suit us when making a big purchase like a vehicle. Many things to consider ranging from maintenance to the availability of charging ports where you live.
What is the Price Range of Electric Vehicles?
There are many factors that go into this. You have your high-end Tesla models that cost a pretty penny, and you have your more cost-effective vehicles like the Nissan Leaf. Depending on how much you are looking to spend, there are a few options, especially if you decide to consider a hybrid model that uses both gas and electricity.
On the high end, Tesla’s can cost anywhere from $35,000 and up for their Model 3, which is considered the value vehicle. The Model X, which is their luxury vehicle, which can cost upwards of $99,000 depending on the luxury packages you choose. In production is their newest Roadster, and when that is released, it will cost upwards of $200,000!
Now look at more pocketbook-friendly electric vehicles out there, the Nissan Leaf, starting at $31,600. Not much difference between the Tesla Model 3, but you will get a vastly different vehicle. Other competitors like the Chevy Bolt are starting at $36,620. So the median price for a new electric vehicle on the low end is around $35,000, depending on the manufacturer. One of the bigger downfalls is that there isn’t a lot of inventory to choose from.
Conclusion: When Electric Cars Will be Affordable
Electric vehicles have seemed out of reach for a long time; but with the prices projected to fall, it may be something more of us will be able to afford. There are many pros and cons to owning an electric vehicle, but the biggest advantage of all is that soon they will be much more affordable, and we will start to see more and more of them on the road in the coming years. The biggest advantage is the opportunity to save on maintenance and gas in the long run.