Why are electric cars so expensive? | US News – US News & World Report | CarTailz

Traditionally, technology costs a lot when it’s new and gets cheaper over time. That’s one of the reasons it’s risky to be an early adopter of something exciting and novel—you know you’re paying more to be among the first to have the shiny new toy, and that those who come after Come on you’ll probably get a better deal. Being an early adopter is also a gamble, because sometimes the new product just doesn’t work the way it’s supposed to.

Electric cars are an interesting case. The last decade has shown ways in which they both exemplify these conventions and in some ways flaunt them.

For example, some electric cars have become more expensive, while others have even become cheaper.

Tesla, notably, has raised prices across its lineup by a few thousand dollars or more in 2022, citing material shortages and hints that more price hikes may be to come. EV startup Rivian made headlines in March when the company announced a price hike across the board, including vehicles customers had already ordered, although the company reversed course a few days later and said it was honoring previously agreed prices on existing orders would.

2023 Chevrolet Bolt EVGeneral Motors

However, Chevrolet, Hyundai and Nissan all slashed prices on entry-level EVs in the summer of 2022. For example, the base 2022 Chevy Bolt costs about $10,000 less than the 2018 Bolt. Meanwhile, the Hyundai Kona EV subcompact crossover saw its price drop a few grand to stay relevant when newer and fancier Hyundai EVs are coming out come into the showroom. It’s also worth noting that these price cuts for certain EV models took place during a summer of record-breakingly low new car inventories, which not only reduced the availability of sales and incentives, but inspired dealers across the country to make “market adjustment” surcharges to squeeze as much profit as possible out of each vehicle. (That’s common for high-end, limited-edition cars, but not what most buyers would expect from a Subaru Outback, for example.)

So we’ve seen a newcomer like Rivian raise prices before it’s even been around long enough to nurture loyal customers, while buyers of some established models, like the Chevy Bolt, are enjoying lower prices than ever before. Again, the point is that the electric car market doesn’t follow traditional rules.

Why are electric cars still so expensive?

Because batteries are expensive

Batteries make electric vehicles possible. Batteries are the largest and most important component of an electric vehicle. Batteries are expensive. Therefore, electric vehicles are expensive. It’s hard to argue with that line of reasoning.

Well, except that battery technology is actually getting cheaper. In the last decade, the average total cost of an EV battery has dropped by 80%. Everyone knew that batteries would get cheaper over time – this is typical of any new or emerging technology. Eventually the initial investment in research, design, maybe some trial and error will pay off and production will become profitable and scale up, and at some point in the process prices will usually fall to allow companies to sell more. Auto industry analysts and pretty much everyone else predicted in the early days of mainstream electric cars that cars with cheaper batteries would also get cheaper. That’s provably wrong, aside from the above examples (Chevy, Hyundai, Nissan) and a few other outliers. While the overall price of batteries plummeted, the price of a new electric car rose by 80%, to be precise. So we see again that electric cars are not beholden to traditional wisdom.

Tesla SuperchargerTesla Motors

That means even if batteries get cheaper, they’re still expensive. The batteries that make an electric car possible are nothing more than the AutoZone battery under the hood of the average petrol-powered car. Automakers are also constantly trying to make these batteries better, which requires continuous investment. There are countless ways to improve an electric vehicle battery. The key issue for an electric car is range – how far the car can go on a charge – but car buyers also want batteries that charge faster, can deliver more juice to improve the car’s acceleration, and in a way into that Auto integrated that does not compromise passenger space or cargo capacity. If the electric car market is still pushing the first-generation Nissan Leaf – widely recognized as the first affordable mass-market electric car – then yes, it would probably be a lot cheaper than before.

Also remember that batteries are particularly vulnerable to setbacks such as the pandemic-related shortages of semiconductor chips and rare minerals, and the situation is so complex that it deserves an article of its own. As of 2020, pretty much everything has gotten more expensive, including batteries.

Because luxury and performance are expensive

In the early days of the Nissan Leaf, it was hard to imagine that we’d see an electric Ford F-150 pickup that performs as well as a gas-powered model, but the F-150 Lightning is just that. Beyond that, it’s practically a luxury -Trucks with breathtaking design and a list of high-quality technology and a mile-long equipment. The 2022 Ford F-150 Lightning starts at around $40,000 for a basic work truck spec (by comparison, an entry-level gasoline F-150 starts at around $34,000), though Ford gets the most out of decades-old F-150 Sales know buyers will spend at least one mid-range trim level, potentially adding tens of thousands of dollars to the sticker price. That’s just one example of how expensive an electric vehicle can be.

2022 Ford F-150 Lightning being charged in a driveway

2023 Ford F-150 LightningFord Motor Company

At this point, mainstream automakers like Ford, Hyundai, Toyota, Honda, Subaru, and the like all have at least one all-electric model in the lineup, and more to come. For the most part, these mainstream EV models are competitively priced…with each other.

However, luxury automakers are also expanding their EV offerings, which is an attractive prospect for these companies as they can demand even more. Whenever an automaker introduces new technology, it usually starts with the most expensive vehicles and then trickles down.

In the case of an electric car, this is a particularly smart move, as automakers can market their superior performance along with upscale design and quality features.

After all, all-electric automakers like Tesla and Rivian have so far been able to charge pretty much whatever they want for their high-performance, luxury EVs – again, note that Rivian is showing signs of following in Tesla’s footsteps, when it comes to price increases outside of the regular model turn of the year. These changes add up: The starting price of Tesla’s entry-level Model 3 was about 25% higher in June 2022 than it was less than a year and a half earlier.

These automakers don’t have gas models to provide a price point for direct comparison, and they differ enough from older automakers that it’s difficult to define the competition.

Because cars are expensive

In July 2022, the median price of an electric vehicle was approximately $18,000 more than the median price of a gasoline vehicle. That’s not irrelevant, but it’s worth pointing out that petrol cars are also expensive.

There are many reasons for this, but in 2022 supply and demand are the big ones.

Some automakers, like Tesla, are notorious for long delays from ordering a new vehicle to actually driving it. This is because demand exceeds supply. Tesla just can’t make cars fast enough, so buyers who really want one have to put up with seemingly random price hikes. This is not a Tesla specific issue. Even Kia Tellurides and Hyundai Palisades are notoriously hard to buy in 2022. But until cars get cheaper, electric vehicles certainly won’t.

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