Will Electric Vehicle Come down in Price?
One of the biggest barriers for would-be buyers of electric cars in the current economic climate, is the purchase price.
There is a massive problem with electric cars – their price tags.
It’s not the only cause for hesitation that prevents the current crop of battery-powered vehicles from silently driving their way into the consciousness of new car buyers but it is the most dominant.
Other factors include, limited options currently on the market, and the ill found fear of limited driving range and a phobia of being stranded in the middle of out back Australia or half way between major cities with a flat battery has limited their appeal.
If we look at the fact the most affordable EV on sale in Australia today, the Chinese made MG electric vehicle comes with both a traditional internal combustion engine and an all electric option. The killer being that the electric version of the car is nearly identical to the petrol engine counterpart in every way except for the heart of the thing and yet the electric version carries a price tag of almost twenty grand more. You can guess how many MG customers are forking out the additional twenty grand on an average quality vehicle to start with.
So, why are electric cars so expensive?
It’s a simple case of economics, when you look at the big picture.
Basically the early adopters of the technology. Companies like Teslar, Hyundai and Porsche have had to invest billions of dollars in research and development over such a short period of time just for Electric Vehicles to become a feasible reality. They are now attempting to recover that investment as early adopters in the consumers purchase the vehicles.
Additionally, whilst mechanically simpler than a traditional combustion engine and driveline , electric motors and battery packs operate in a completely different manner and have required an altogether unique testing process that requires massive engineering teams to understand their nuances and tune them properly while also ensuring they are safe to drive and deliver long-term reliability. This also means costs for electric vehicle replacement parts will be quite high in the early days. It is rumoured within he auto industry that a replacement Teslar battery will cost an excess of $15K currently. (accuracy of this claim has not been cross checked)
It’s simple economies of scale.
The other factor to consider is that only a handful of companies, including LG Chem in South Korea, Panasonic in Japan and CATL in China, are producing batteries for EVs, and are therefore restricted in their production output and control the market price. Adding to this is the current chip shortage problem bought on by a combination of world conflicts and the Covid pandemic. Parts for electronics are become are and expensive. The cost of which is passed onto the consumer.
That will change over the next decade or so. Prices of electric cars will drop significantly, making the electric vehicle moire affordable for the average Australian household.
This will happen as the development costs stabilise and even become redundant and brands widen the range of Electric Vehicles. This will spread the costs across a broader base with larger volumes and reducing the unit price of individual components.
Have a look at our other electric vehicle articles.