Why are EV's so Expensive

A new Tesla Model 2 planned for 2024 will be marketed as being the most affordable Tesla EV ever. It’s to be less expensive than the Model 3 and Y. The likely reality, is that it will still be out of reach for many average new car buyers, just like the cost of most EV’s.

So why do EV’s cost so much and is it worth waiting for the price to come down? Well, if you check out the cost of most EV’s compared to their internal combustion engine petrol equivalents it seems that EV’s are really a choice for the wealthy or for a business fleet.

One of the lowest priced EV’s, with a matching petrol version, on the Australian and New Zealand market is the MG ZS. It’s a small SUV, the petrol version for the MG ZS Excite costs $25,000 plus ORC’s. The EV version of the MG ZS Excite is priced at $54,000 plus ORC’s.

You could actually buy two petrol versions of the MG ZS’s for that price.

Remember the MG ZS EV is one of the cheapest EV’s on sale. Another brand, the GWM Ora is more affordable at around $48,000 plus ORC’s. (Note, government rebates not included).

If you do have a bit more cash to part with, you’ll still experience the EV premium.

We have not included the ORC’s or any government rebates as these differ from model to model. So, here are guide prices for some of the EV’s we are seeing on our roads currently:

1. The Nissan Leaf starts at $50,000
2. The Mazda MX-30 is $75,000
3. The Kia EV6 is $77,000
4. The Hyundai Ioniq 6 is $80,000

What makes EV’s so expensive? Here’s Scott Nargar’s explanation for the higher cost of EV’s, he is Hyundai’s senior manager of Future Mobility.

It’s the technology throughout the EV, and particularly the battery and electric motors that are expensive and this cost is passed on. All EV manufacturers are chasing the same very limited supply of raw materials for their battery packs.

There are established mining industries for cobalt and copper, but it’s the lithium which goes into lithium-ion batteries which adds the biggest costs.

Lithium-ion batteries are the most common type of electric vehicle battery and are chosen for their combination of high density and light weight. As the electric car is becoming more popular the batteries have increased in price. There are about six different battery manufacturers today and a huge demand for a limited amount of batteries.

EV battery costs and the limited supply of raw materials which make up the battery aren’t coming down over the short or long term unless a new renewable material is discovered to make a battery more sustainable.

As for when EV’s will cost the same as their petrol versions, there may come a time, but don’t hold your breath. We can’t see this happening any time soon and we don’t think EV’s will ever come to parity with internal combustion engines unless governments force the issue by taxing fuel-based vehicles or increasing rebates.

Australia will start mining lithium for batteries before 2027 and a number of car manufacturers are already in the queue. This type of mining doesn't happen quickly, the equipment, refining and supply chains all need time. So, no cost parity for many years ahead.

Mining companies also need to consider the issues around ethical, sustainable, and safe mining practice. So, there you have it, the cost of an electric vehicle is expensive because they are expensive to make. Not only that, but there doesn't appear to be any point worth waiting for the price of EV’s to come down any time soon. We think you should remain with the tried and trusted, unless you try out at the second-hand EV market, what dangers can there be?

August 2023