Green Update: Why Do EVs Cost So Much?

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.

More bad news: It has been claimed by many that the running and maintenance costs of EVs are much lower than gasoline cars because they have far fewer moving parts, require much less maintenance, and so on. Nissan estimates that the 5-year operating cost for the Leaf will be $1,800 as opposed to $6,000 for a gas-powered car. The case for this scenario is made here.

However, electricity costs vary widely, and in one case where juice cost 31 cents per kWh (which is really high; 16 cents was the cost in Volt rollout states), the cost of operating a Volt was more than that of a gas car!

An interesting piece by Michelle Krebs on payback for hybrids against comparable gas cars in a scenario of rising gas prices puts the Ford Fusion Hybrid on top and the Volt at the bottom. The spread among luxury hybrids is even greater.

Envia Battery Lab

But, withal, EVs have shown staying power, and battery reliability has greatly improved. More significantly, cost per kWh will drop radically if you can believe the stories about Envia. The company claims energy density in their still-experimental batteries has increased three-fold, while cost has dropped by half.

It’s not a fly-by-night company, and the CEO claims that “packs are already built on an automotive scale and are being tested by automakers around the world.”

Have we heard such claims before? Yes, so maybe it’s not quite time to jump into the all-electric EV world. But that time is coming, and the carmakers know it: Gas prices aren’t going down any time soon.

Is EV development (and cost) solely dependent on battery technology? Give us your thoughts.


Find Used Cars in Your Area at CarGurus

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