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Green Update: Why Do EVs Cost So Much?

March 13th, 2012

Tesla battery

The high cost of EVs and most hybrids is owing to the batteries, as most of you know. And 65 percent of Americans simply won’t pay the extra cost of an EV over a gas-powered car.

We did a story last month about Tesla’s “bricked” Roadsters, wherein the cost of replacing the battery (photo above) was claimed by the factory to be about $40,000, or 37 percent of the car’s original cost. For the Volt, I’ve heard a replacement battery cost of anywhere from $8,000 to $13,000.

And there are other associated costs with new technology, including the up-front cost of engineering, tooling, marketing and small production runs. Sure, these get reduced or amortized over time, but in the beginning, not.

Another “opportunity cost” for the buyer may be the government-sponsored tax credit. This could become an automatic add-in to the car’s price—as one of our commenters has claimed (scroll to Randy here). So in fact the federal $7,500 tax credit, in his scenario, goes into the carmaker’s pocket. The buyer gets the rebate but pays $7,500 more for the car. If true, that is a sick scam that ought to be investigated.

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