Why Electric Vehicles are So Expensive

Reasons Why Electric Vehicles are So Expensive

Cost considerations: exploring the expense of electric vehicles.
Cost considerations: exploring the expense of electric vehicles.

Product Research and Development

The automobile industry has evolved from ICE vehicles to hybrids and EVs in the last century. In fact, companies have invested a huge amount of their capital in the research and development of these vehicles.

Unfortunately, developing EVs from scratch for firms like Rivian and Tesla has been quite costly. And being a newer tech, the cost of R&D for EVs is higher than for ICE vehicles. This, in turn, has resulted in costly EVs.

Low Competition

Several companies have started producing EVs; in fact, most of them have added these cars to their existing ICE lines. But very few companies, including Tesla, have invested in 100% electric vehicles.

Therefore, they are monopolizing the market. Currently, Tesla commands about 66% of electric car sales, leaving brands like GM, Ford, and Volkswagen to compete for the remainder of the market share.

It’s a Luxury

EVs play a major role in lowering our carbon footprint; therefore, they shouldn’t be luxuries. But their pricing makes them luxurious vehicles set aside for people with some money to splurge.

So, most people buy them as a status symbol. In fact, you have a high likelihood of finding an EV near casinos and luxury hotels.

Batteries are Expensive

The cost of the raw materials used to make EV batteries is quite high. In fact, it increased by 140% in 2020, meaning electric vehicles will cost more.

Most EVs use lithium-ion batteries because they have a long life and are powerful. Unfortunately, these batteries have certain expensive metals that play a huge role in the overall cost of the car.

Insurance costs

Even though the insurance cost is not part of the overall price of an EV, it does matter a lot. And that’s because you’ll have to insure your new car before you can drive it. As such, the first thing you’ll do is compare EV insurance.

Unfortunately, the insurance coverage costs for EVs can be quite high. After all, repairing or replacing electric vehicle parts and the battery can be quite expensive. Therefore, insurance firms set a high premium for EV cars.

Time and Energy to Manage

When purchasing a vehicle, we always consider its price and forget the time and energy needed to manage it. After all, managing an ICE vehicle is quite straightforward; all you have to do is fuel it and drive. On the other hand, charging an EV can take up to 40 hours.

This means you’ll have to get an alternative car for almost two days as your EV charges at home. On the other hand, public charging stations can take over half an hour to charge your car, which is over 25 minutes more than it would take to fuel an ICE car.

Plus, you’ll have to make some home improvements to accommodate your EV’s charging station. You may even have to install solar panels to help lower your utility bills.

That’ll take time, energy, and resources you wouldn’t have spent on a traditional car.

Another huddle is getting a public charging station, especially when travelling. It’ll take a few minutes to find a charging station since they aren’t as many as conventional gas stations.

Limited Tax Credits

Even though they’re environmentally friendly, EVs have limited tax credits in Canada. In fact, owning some EVs doesn’t necessarily mean you’ll enjoy some tax credits.

And that’s because the government sets the requirements for an EV to enjoy certain tax credits. For example, if it’s a passenger car, it should have a retail price of under $55,000.

Therefore, the incentives may be attractive, but you’ll have to save for a few months to own an EV. For instance, a plug-in hybrid can get you a $5,000 incentive. So, you’d have to look for $50,000 to afford a plug-in hybrid passenger car.