There’s no question that most people want to do their bit for the environment and save some cash while the cost of living is so high. In theory, electronic vehicles (or EVs) tick both of those boxes… but there’s a big but. The problem is the initial cost of an electronic vehicle is still incredibly high and most people can’t shell out a huge lump sum for a car even if it will eventually pay for itself over time.
So, why are electric vehicles still so expensive?
According to Finance Buzz, there are a “whole interlocking set of answers” so we’ve taken a closer look at what’s happening in the world of electronic vehicles including if the price tag might reach an affordable level any time soon.
5 Reasons for the High Cost of Electronic Vehicles:
1. Lithium batteries aren’t cheap
Electronic vehicles use lithium batteries which are way more expensive to manufacture than the battery in a traditional car. Although the price of lithium batteries has dropped in the last 12 months, they are still very pricey which adds to the overall cost of an electronic vehicle.
2. Supply chain issues
We’ve all heard a lot about the supply chain issues which are not only affecting the wait lists for new cars, but also the cost. Elon Musk commented on delays Tesla are likely to face, stating “there are some raw material constraints that we see coming, in lithium production, probably in about three years, and in cathode production.” Other manufacturers and industry leaders have also put out more modest targets for electronic vehicle production than in previous years due to the constraints the industry is facing.
3. Not much competition in the electronic vehicle market
There aren’t that many companies manufacturing EVs at the moment, meaning those who are can essentially charge what they like without risk of being undercut by a competitor. In theory, the more companies entering the electronic vehicle market, the lower the prices will get. Let’s hope we see some more players join the game soon.
4. Waiting lists and limited supply
The waiting lists for EVs are long. Very long. Months and months long. “Because the ratio of people wanting to buy an electric vehicle is greater than the available manufacturers, the materials and machinery required affect the speed of manufacturing, consequently impacting price,” explains car financing company Car Plus.
5. People are willing to pay
The fact is that people are willing to pay a higher price for EVs which means that EVs will continue to cost a lot of money. As more manufacturers enter the market and the competition heats up, we should see a drop in price.
So, we aren’t looking likely to see a dramatic drop in electronic vehicle pricing any time soon. With supply issues set to continue for some time yet, and delivery expectations being lower than the previous few years, the upfront cost of buying an EV is still going to be substantial but that’s not to say that it’s not worth it. EVs have a great range and are far cheaper to run than a fuel engine so over time, you will offset your initial outlay, plus you’ll be doing your bit for the environment. Luckily waiting lists to actually get an electronic vehicle are huge so you have lots of time to decide whether to take the plunge or not!
