Price Check: Why Are Electric Cars So Expensive?
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Whether you’re thinking of buying an electric car because it’s better for the environment or because you want to save money on repair and maintenance costs, you’ve probably noticed something disappointing: Electric cars are more expensive than gas cars.
It’s true that you can expect to save money in the long run — the Department of Energy estimates that you’ll spend 60% less to power an electric vehicle than a gas one. But that doesn’t do much to address the high price of buying an electric car up-front.
Even the cheapest electric cars like the Nissan LEAF can cost more than their gas-powered alternatives. With that in mind, let’s answer the question: Why are electric cars so expensive? And what can you do to find an EV with a more affordable purchase price?
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Why Are Electric Cars So Expensive? 3 Reasons Why
Electric cars are more expensive than conventional cars on average, but EV costs vary widely from one automaker to the next. So if you’re wondering why electric cars are so expensive, it’s worth shopping around. After all, a new Porsche Taycan will cost a lot more than a Kia EV6 or a Hyundai IONIQ Electric.
Here are three key factors that explain why electric cars are so expensive:
The main reason electric cars cost so much is that EV batteries aren’t cheap. Most electric cars rely on lithium-ion battery technology, which stores electrical energy and uses it to power the electric motor.
Battery electric vehicles (BEVs), which rely solely on electric power, can have a battery capacity of 100 kWh or more. Other types of EVs, such as hybrid electric vehicles and plug-in hybrids, have an internal combustion engine (ICE) that runs on gas, but they still use a battery pack to supplement the conventional motor.
According to research by MIT, battery costs have gone down significantly over the past few years, but they’re still a key reason why electric cars are so expensive.
Battery prices alone don’t explain the high cost of EVs. In addition to the battery pack itself, electric cars require advanced computer software to operate smoothly. While Tesla’s Autopilot software has gotten plenty of attention, they aren’t the only automaker developing new driver-assist technologies. These systems often include high-tech infotainment screens and navigation systems, and multiple cameras and sensors outside the vehicle.
The latest evidence suggests that electric cars and hybrids are cheaper to maintain than ICE cars, but their production costs can be significantly higher.
Electric cars have specialized parts that require trained experts to repair. Just try taking your Tesla Model 3 to your local mechanic: Chances are they won’t be able to fix it, and you’ll need to visit a Tesla Service Center instead.
Automakers may need to spend more to train the professionals who build and maintain electric vehicles, and the sticker price reflects this.
In addition, car makers are on the hook if anything goes wrong within the first few years of ownership. Automakers are legally required to offer an eight-year warranty on the EV battery pack, which goes above and beyond warranties provided with most new cars.
Finally, many automakers are investing in cross-country networks of EV chargers and may even offer free charging or discounts to buyers. While most networks charge per minute, the cost of building that infrastructure is a big up-front investment.
These operational expenses help to explain why electric car makers charge more for EVs than they do for conventional vehicles.
Supply and Demand
The third reason why electric cars are so expensive is supply and demand: More people want to drive electric cars than there are EVs available, and car makers simply can’t keep up. Ford has paused reservations for its new F-150 Lightning pickup truck, while the wait time for a new Tesla model can be six months or more.
That’s good news for people who already own a Tesla or another electric vehicle: It will retain its resale value longer than the average car since so many people are interested in buying one. But this can be bad news for EV buyers, since even a used electric car can cost nearly as much as a new one.
As electric cars increase in popularity, we can expect their prices to remain high, until car makers are able to produce them at a faster rate and with cheaper materials.
3 Ways to Find a Less Expensive Electric Car
If electric cars are so expensive, and their prices aren’t expected to go down soon, is there anything you can do to find one for a more affordable rate? Fortunately, there are several ways to reduce the cost of buying an EV:
Tax Credits and Other Incentives
Not every buyer is eligible to claim a tax credit, but it can lead to significant savings if you are. The federal income tax credit offers up to $7,500 off of any income taxes you owe, while many states have their own rebates and incentives.
Incentives range from rebates for installing a home charging station to discounts on tolls. With any incentive, be sure to read the fine print: Tax credits don’t reduce the sticker price, so you may not see any savings until you file your taxes.
EV Lease Deals
Another way to drive home with an electric car for an affordable price is to look for an EV lease deal. While leases have drawbacks, such as annual mileage limits or a requirement to purchase more expensive car insurance, monthly lease payments are lower than loan payments for many popular EV models.
If you want to have access to the latest technology without paying a premium to buy a new car outright, leasing a Tesla or another EV may be the way to go.
Used Electric Cars
Finally, if new electric cars are too expensive for your budget, you can always explore the used-car marketplace. While some EVs retain their resale value, others depreciate quickly, so you can often find great prices on pre-owned models.
Even luxury EVs like the BMW i3 may sell for significantly less on the used-car market, making them more affordable for many buyers.
You’ll want to do your due diligence and check the battery life before buying a used EV, but many EV models are known to maintain their battery capacity for years.
Choose the Right EV for You
Why are electric cars so expensive? For the most part, it comes down to three things: expensive battery technology, high production costs, and high demand from car buyers. But there are still several ways to reduce the cost of buying an EV, such as looking for tax credits and other incentives or considering a used EV.
Although price is a big factor in determining which EV to buy, it isn’t the only thing you’ll need to consider. After all, the most expensive electric cars don’t necessarily have the best driver-assist technology or the longest range. Check out our electric car guides to help you decide which make and model is the best fit for your lifestyle.
Or, enter your ZIP code here to start comparing used EVs today:
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