Why are electric vehicles expensive?
To understand the price difference between an electric and traditional car, we need to understand the basic working principle of a battery-powered vehicle. In reality, EVs are simpler than their conventional counterparts. The absence of an IC (Internal Combustion) engine and many other mechanical components takes away the complexity factor in a battery-electric car. The below points will give you a clear picture of why EVs are expensive to own.
An EV comprises three critical components, that is the battery pack, electric motor, and transmission.
Out of the three components, the battery pack is the most expensive one. One of the primary reasons for the high cost of Battery Electric Vehicles (BEV) is the battery itself, which is critical to store electrical energy.
Currently, battery-powered vehicles use lithium-ion technology, which has been around for quite a while now. Your gadgets, such as smartphones, laptops, tablets, etc., use lithium-ion batteries.
But when it comes to eco-friendly cars, it’s much bigger in size and the usage cycle takes a giant leap.
Now, the next obvious question would be why lithium-ion batteries are so expensive? It’s because of the materials required for manufacturing these batteries. Here are the reasons behind the high cost of EV batteries.
EV batteries need rare earth metals such as lithium, cobalt, and nickel, which are not readily available.
The metals have to be mined and processed to be used in EV batteries.
A battery pack accounts for around 30-40% of an electric car’s cost.
The complex lithium-ion battery technology is the primary reason why automakers find it so hard to achieve parity between the prices of EVs and conventional cars. However, the battery is not the only reason. Several other factors also bump up EVs prices significantly, which we will discuss in the following sections.
Other factors affecting the price of an EV
It’s not only the battery that bumps up the price of an electric car. Several other factors contribute to making EVs so expensive compared to combustion-engine vehicles. Below are some of the factors that play a role in making battery-powered cars costly to buy.
Research and development: Automobile manufacturers invest a lot of time and money in the research and development of an EV. Every component must be specifically designed for a particular electric vehicle, from the battery pack to the wheels. Hence, the automakers are forced to increase the price to offset the manufacturing costs.
High-end technology: The working mechanism of an electric vehicle may be simple compared to a conventional car. But the technology that goes into making an electric car is high-end and complex.
Complex electronics systems are required to manage high-capacity batteries, electric motors, etc. Some battery-electric vehicles also come with advanced driver-assistance features. Hence, the BEVs cost significantly higher than traditional cars.
Lack of skilled personnel: Electric vehicle technology is in an evolving phase. Hence, there is a lack of qualified professionals needed to manufacture these vehicles. It indirectly impacts the overall cost of a battery-powered car. Also, the lack of expert mechanics to repair such cars makes owning an eco-friendly vehicle expensive.
Car insurance cost: Since the value of an electric car is high. The car insurance premium is also on the higher side. Hence, insuring an electric vehicle is more expensive than insuring a petrol/diesel car.
A battery-powered car is equipped with complex electrical components, so you may also need to purchase specific add-ons to cover those components. Hence, the premium can bump up significantly. Expect the insurance premium to reduce when the battery cost reduces.
However, by purchasing insurance online from digital-first insurers such as ACKO, you can save on premiums by eliminating the cost of agent commission and other processing charges. At ACKO, you can insure your electric car within a few minutes without any paperwork.
When will electric cars be affordable?
Currently, there is no specific answer to this question. The main challenge for EV makers is the cost of the battery technology. The cost of battery packs may come down with the innovations in the automotive industry. But that is still some years away. Until then, we cannot expect parity in price between electric and conventional cars.
It’s not only the expensive battery technology; automakers also need to find cheaper alternatives for other components being used in EVs. From the infrastructure to the manufacturing process, everything needs to be streamlined and cost-effective. Only then, we may see a day when electric cars are priced on par with their traditional counterparts.
Considering the current scenario—yes—electric cars are expensive, and there is no denial about that fact. But EV technology has come a long way in making them viable, practical, and straightforward to use. However, the initial investment needed to own such a vehicle may burn a hole in your pocket. But the government-provided incentives and benefits on the purchase of such cars should soften the blow for now.
Also, read: Electric car vs petrol car
Conclusion
The automobile brands are working towards developing new technologies that will make battery-powered vehicles much more affordable. But you cannot hide the fact that eco-friendly cars have a lower running/maintenance cost than petrol/diesel cars. That means in the long run, you will eventually make up for the initial investment by saving on the running/maintenance costs. To wrap it up, EVs might come at a premium, but the benefits in the long run still make them worth your money. Also, with the evolving battery technology, don’t be surprised if they become affordable a few years down the lane.
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