Although electric vehicles offer an eco-friendly alternative to traditional fossil fuel options, their rising price tag may be a deterrent for consumers looking to make a change.
The overall cost of electric vehicles has steadily risen from 2012 to 2016 and, despite government subsidies, the price continues to be higher than conventional vehicle options. Here’s a look at the “driving” factors behind this rising cost.
Luxury Vehicle Production
The rising cost of electric vehicles can be attributed to, in part, the increase in production of more expensive luxury car models. As manufacturers develop a more significant number of affordable options, the overall costs for electric vehicles may begin to decrease. Luxury vehicles also include a larger number of features and services, which may, in turn, drive up their price.
Recent Market Trends
In 2012, the price for electric cars was at an all-time low, with an average cost of around $30,000 per vehicle, though the cost per range of mile was around 640 dollars. The average list price for an electric vehicle in 2016 was nearly 50,000 dollars, although the cost per range of mile was closer to 400 dollars.
Although the overall list price increased, the efficiency also increased, which in turn increased the vehicle’s value.
Longer Battery Life
Electric car costs have also risen due to technological advancements in battery life, such as improvements in battery energy density. The higher the battery energy density of an electric vehicle’s battery, the longer the car can go between charges. Users can spend less time overall at charging stations and commute longer or further than they have in the past.
This convenience factor wasn’t taken into account when evaluating the rising cost of electric vehicles.
The high price tag associated with electric vehicles doesn’t take into account available government subsidies and tax credits. It’s worthwhile to consider these incentives when calculating the cost of a loan for your new vehicle. (Not sure how to do that? There are easy online calculators that can help.)
Depending on when a car is purchased, consumers can save anywhere from $2,500 to $7,500 in the form of subsidies from the federal government. This can help equalize the cost between an electric vehicle and a conventional model.
As oil reserves are depleted and the price of a barrel of oil begins to rise, the cost to purchase and operate conventional fossil fueled vehicles may surpass the overall cost of electric cars. This is expected to take place by 2022 when electric cars will be considered a more affordable and viable option. Additionally, the cost to manufacture the batteries used in electric vehicles may continue to decrease, which will translate to more affordable vehicle prices.
Several companies, including Tesla and Chevrolet, developed affordable electric vehicle options in 2017, with starting prices of around $35,000. As demand for electric vehicles increases, manufacturers may be more inclined to continue to create more affordable options and reach a broader range of consumers. In turn, this could help reduce the overall cost of electric vehicles as more options become available.
Once the percentage of electric vehicles on the road begins to rise, cities with large volumes of electric cars may consider installing dynamic vehicle charging systems, which will enable vehicles to charge while they’re on the highway. This will reduce the time drivers spend at charging stations and incentivize the purchase of electric vehicles, as it will reduce the wait time.
Depending on the efficiency of the dynamic charging systems, drivers may only need to spend 25 percent of their drive time on these systems.
Despite the rising price, however, converting to electric vehicles will help improve the air quality in metropolitan areas and reduce carbon emissions that contribute to global climate change. Over time, electric vehicles are expected to become a more affordable and universal option.