Electric Cars to become cheaper but are they already?

If you have noticed with every new launch of Electric cars they are getting slightly cheaper. Solving some of the major concerns of early EV adopters like sufficient range and a charging network, sales of Electric-only cars are picking-up steadily replacing not only traditional fuel powered cars but also hybrids.

Established Automakers are soon realising it’s harder to continue selling traditional ICE cars than to innovate in emission free methods. Especially electric which has gained popularity among general public with raise of incentives offered by governing bodies.

But one major problem still remains that the cost of buying a new EV is still relatively expensive.

So why electric cars are expensive?

Batteries basically… many thousands of individual pencil-size battery cells. Packed typically underneath the floor of vehicle called ‘Battery Pack’. While the electric motors and its transmissions are relatively inexpensive. Such battery pack makes the most costliest component which unfortunately makes the electric car expensive.

To add to this complexity, batteries also require sensors and software to control cell voltage, charge and discharge rates. And to maintain optimal temperature inside for batteries to last longer. Such system is called Battery Management System (BMS).

It’s basically like a fridge for batteries running 24/7 even when car is switched off and due to this system battery life is extended so much. This is the reason why batteries in laptop or mobile phone cant be compared to one’s in EVs.

How would batteries get cheaper?

Building more of anything makes it cheaper, same applies to batteries. Produce more and the per-unit price falls. Buying components and materials in bulk is usually cheaper too. Inadvertently will make Electric cars cheaper. But the use of expensive materials like cobalt also limits how cheaply they can be produced.

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As cell production increases, battery pack prices will naturally fall further. As they have done already between 2010 and 2020 and forecasted to reduce even further ahead in chart above. And a holy grail battery tech target of $100 per kWh is something all automakers are aiming for.

Major battery suppliers such as LG Chem, Samsung SDI and Panasonic are constantly working on ways to make batteries more affordable. They are also trying to innovate new battery technologies including solid state batteries, ultium and graphite based batteries but so far can’t produced affordably or safely in commercial quantities.

When will battery prices come down?

Tesla CEO Elon Musk claims that future developments planned by Tesla will reduce battery manufacturing costs by a solid 56 per cent, and deliver an increase in range of 54 per cent. Tesla started working with Contemporary Amperex Technology Ltd. (CATL) to develop batteries that use little-to-no cobalt.

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But Musk admitted at Tesla’s Battery Day Event on 22 September 2020, that it will take Tesla up to 3 years to achieve the proposed advances in battery technology and get to mass produce such batteries by 2030 which is the hardest part than a concept or a design.

If this is achieved, it will put Tesla much ahead of competition then it already is. But not all automakers are behind, VW the largest Automaker wants to put their embarrassing emissions cheating scandal behind by committing to go all electric and has targeted to sell 1 million EVs by 2023.

Like Japanese automakers in 90s produced cheap and efficient car that caught the trend. Now many Chinese EV makers like BYD, Xpeng, NIO are racing to capture market by designing a cheaper Electric car.

Are Electric cars already cheaper?

Very interesting survey by Castrol suggests that the cost for new EV to go mainstream is at a tipping point of $36,000. Hence there are new EVs from Honda, VW and Mazda coming out with starting price way below this price, even if it means sacrificing on range.

Direct line a UK based car insurer has calculated that annual running costs average £1,742, or £33.50 per week for an electric car, which is 21 per cent cheaper than the running costs of a petrol car at £2,205 per year or £42.40 per week.

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Options to own a Electric car

PCP Contract

Personal Contract Purchase (PCP) for EVs is basically a loan to help you get a car. It’s a option that makes no distinction with electric cars or ICE. Car is yours for certain amount of time but then you have to return it at agreed amount and mile covered.

Car Leasing

There are growing number of electric-only car leasing startups like DriveElectric, EVision, WeVee and many others. But in my opinion car leasing is not the best option. As the whole point of leasing is to reduce the costly maintenance and repairs. But as EVs are negligent in that areas you would be paying away handsomely.

Buying Second Hand

Can’t wait or afford a new EV then why not consider a second-hand. Electric cars aren’t like traditional ICE cars. They have fewer moving parts than ICE cars to be worn out. Quite often EV owners claim despite using car for over 200,000 miles it still drives like new. EVs with good BMS tend to last longer without losing much in battery degradation.

Revolution Electrified’s Take

EVs on average are more expensive to buy outright but the overall cost of ownership (i.e. when you factor in fuel, maintenance, tax and insurance) can be drastically less compared to ICE cars.

Yes the prices of Electric cars are going to get much cheaper in future for sure. But dont consider another cheap fossil fuel, hybrid or natural gas cars as intermediate step. As these will prove disastrous financial decision if you consider their depreciation value in next few years.

Many countries are committing to stop sale of ICE cars as early as 2030. The 2015 Paris Agreement set this global goal to reach net zero emissions. So any non emission-free mode of transport is going to be a costly asset and would be subject to tax heavily in coming future.

And think about the planet, we can’t continue to burn more carbon into the atmosphere the Climate Clock is ticking. If you can cut down on car that’s best. Choose replacing them with bicycle or even electric bike or scooter if you can commute around with them. They are so much fun.

And if you are thinking about buying your first EV or just waiting for electric cars to get even more cheaper why not give it a try first and plan your EV holiday.

Understand the History of EV and learn more about why this is a Revolution Electrified.