Batteries Are Getting Cheaper But This Is Not Reflected In The Cost Of Electric Vehicles

Electric Car Cost

Lithium-ion batteries have also become less expensive: a lithium-ion battery cost $946 per kilowatt-hour in 2011.

Electric vehicles have been predicted to follow the same path for a long time. However, even as batteries have become more affordable, the cost of buying a new electric automobile in the United States has risen dramatically. According to Cox Automotive, an automotive services company, the average price paid for a new electric car in 2015 was $35,880, which was not far above the industry average of $33,543. However, by last December, the average cost of an EV had risen to $63,821, over 80 percent higher than the average cost of a gas car, which was roughly $47,000.

Electric vehicle analysts have been whispering, analyzing, and projecting a mythical crossover point for EVs for nearly a decade: “price parity,” or when electric cars will cost the same to create as regular, gas-powered cars. If battery prices continue to drop, EVs will someday be less expensive than traditional cars. Price parity, according to analysts, will be attained when batteries cost less than $100 per kilowatt-hour. However, even as battery prices approach that level, the magical crossover point appears to be edging closer.

“However, when we compare the average starting price of a gas automobile to that of an electric car, they aren’t getting any closer.” They’re starting to diverge.”

Electric car demand has been steadily increasing for years, but in recent months, as petrol prices have risen and auto manufacturers have released new models, it has exploded. And, by some measures, electric vehicles are already less expensive than gasoline-powered vehicles. According to a Consumer Reports investigation, many electric cars end up being cheaper than gas-guzzling cars over the course of their lives; after all, electric cars cost substantially less to “fuel up” than gas cars, and they also cost less to maintain because they have less moving parts.

However, the sticker price of electric vehicles remains greater than that of gas-powered vehicles, in some cases by a significant margin. The Hyundai Kona EV, a small electric SUV, for example, starts at $32,000 in 2022. According to a recent Cox Automotive survey, 51% of American consumers perceive electric vehicles to be “too expensive to really contemplate.” According to Morning Consult, a poll and research firm, 47% of Americans are unwilling to pay more for an electric vehicle. While smaller automakers can still take advantage of a federal tax credit for electric vehicles — up to $7,500 off a new car — the larger players, such as Tesla and General Motors, are no longer able to do so. (Manufacturers with over 200,000 electric vehicle sales are no longer eligible.)

Why, therefore, have electric automobiles defied the clean-tech trend by becoming more expensive? Part of the cause is that automobiles have become more expensive in general. “Inexpensive new automobiles have pretty well vanished in the United States,” argues Nathaniel Bullard of the energy research firm BloombergNEF. More than half of new automobiles sold in 2012 were under $30,000; more than half of new cars sold in 2020 will be over $40,000.

This shift isn’t entirely explained by inflation: A car that cost $28,000 in 2012 would cost roughly $35,000 today. According to a database of every vehicle on the market in the United States, the average cost of an EV model in 2014 was $49,000, while gas-powered automobiles cost $41,000 – an $8000 difference. Hardman points out that nowadays, an EV costs around $70,000 on average, whereas a gas car costs around $48,000 – a $22,000 difference. “Automakers will first put out their big, range-topping, highly pricey — kind of like their halo model,” DeGraff said, referring to a marketing term for a high-end car aimed to lure buyers into the brand. Because crossovers are frequently more expensive than compact vehicles or sedans, automakers can introduce EV crossovers with better profit margins, such as Tesla’s $63,000 Model Y.

According to Corey Cantor, an analyst at Bloomberg NEF, car companies are also placing bigger and better batteries in their EVs, which leads to greater pricing. The Nissan Leaf, a tiny vehicle with a 24-kilowatt-hour battery and a range of only 84 miles, was the best-selling completely electric car over a decade ago. The Tesla Model 3 in 2022, on the other hand, will have a battery capacity of 50 to 82 kilowatt-hours, with a range of 220 to 313 miles.

Whether EVs are approaching price parity depends on how you define the word. Electric cars are approaching price parity with luxury automobiles, according to Cox Automotive data, but not with the industry as a whole. Because the supply of electric vehicles is so limited — and demand so great — some owners are reselling their vehicles for more than they paid for them new. With gas prices at an all-time high, demand for electric vehicles may exceed the higher initial cost.

President Joe Biden, on the other hand, has proposed that by 2030, 50 percent of new car sales be electric. Governors in some states, such as California, have committed to making all new car sales electric by 2030 or 2035. “It can’t, can’t continue if we’re going to get like 100 percent of automobile consumers in California and other jurisdictions to pick electric vehicles.”


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Carl Riedel is an experienced writer focused on using Open Source Intelligence (OSINT) to produce insightful articles. Passionate about free speech, he leverages OSINT to delve into public data, crafting stories that illuminate underreported issues, enriching public discourse with perspectives often overlooked by mainstream media.