Why electric cars are so expensive

There is no need to conduct complex market research to realize that all electric cars are expensive – significantly more expensive than traditional internal combustion engine cars. Given all the advantages of electric cars, the demand for them is constantly growing, but unfortunately, not every driver can afford to buy such an expensive car. In this article, we will answer the most pressing questions about electric cars: why, despite the high cost, they are very popular, and why do electric cars cost so much?

Advantages of electric cars

A survey of motorists in the United States was conducted in the fall of 2022. More than 50% of respondents said that the high cost of electric cars makes them unaffordable to buy, and this is the only obstacle in favor of an electric car. 

Still, the high price could not affect the steady growth in demand for electric cars and the changing ratio of electric vehicles to conventional vehicles in today’s automotive market. In the last three years alone, the number of electric vehicles on the road has tripled, and by 2030, according to IEA forecasts, there will be ten times more electric vehicles on the road.

A number of factors are contributing to the increasing demand for electric cars:

1. Low operating and maintenance costs. The vehicle has high-performance engines and consumes little energy. In addition, it does not require regular oil changes and engine maintenance, replacement of filters, plugs and other components, unlike internal combustion engines.
2. Comfort, no noise. Electric motor works almost silently, so while driving in the cabin there is no characteristic rumble, there are no vibrations that are present when the internal combustion engine. Electric motors provide smoother operation of mechanisms.
3. Dynamics, instant torque. The point is that an electric motor does not need time to build up power, change gears. Electric cars accelerate very quickly and smoothly, are stable in motion, and brake just as smoothly and quickly.
4. Value retention. Used electric cars do not lose value like gasoline or diesel cars because electric cars have fewer parts that are subject to wear and tear during use. As a result, the owner can resell the electric car at a high price. The high price level of used electric cars is also due to their growing popularity in the market.
5. Safety. The basic equipment of most electric cars includes advanced active safety systems, such as automatic emergency braking, lane change warning and others. High safety of an electric car is also promoted by design features – batteries are located in the lower part of the body, the car has a low center of gravity, it is stable on the road, less exposed to the risk of overturn, including in the event of a collision.
6. Environmental friendliness. Electric cars do not emit harmful gases into the atmosphere at all. Even the energy consumed can be obtained from alternative, environmentally friendly sources (wind, solar panels). Some cars are equipped with solar panels. 

Now let’s understand why with high demand, rapid development of technology, electric cars are still very expensive.

Factors Affecting the Cost of Electric Vehicles

The cost of any car is influenced by several factors. These are brand popularity, complexity of production, level of equipment and quality of interior trim, powertrain and safety systems. 

Let’s look at the main factors – the reasons for the high cost of electric cars.

Limited production volumes

The greater the production capacity, the higher the production volumes, the lower the cost of manufacturing new parts and components for the automobile. What do we see in today’s market? Thousands of enterprises are engaged in the production of cars with internal combustion engines, and the production volume of cars with internal combustion engines amounts to tens of millions. And only a small number of plants have the capacity to produce lithium-ion batteries and electric motors for electric vehicles. Low volumes – high production costs.

Complex logistics 

Every automobile brand strives to develop a dealer network around the world. As a rule, there are services and representative offices of all leading car manufacturers in cities in every country, so there are no problems with choosing, buying and servicing cars. 

Electric cars are often more profitable to buy abroad, for example, at American auto auctions. One of the best international online auctions is PLC Auction, where you can buy a used car from anywhere in the world with delivery to your country. This is a reliable resource, a professional company that is trustworthy, as evidenced by PLC Auction reviews. 

Low maintenance earnings

Automakers earn money not only on the sale of a car. The lion’s share of car companies’ income comes from the sale of components and spare parts for cars. There are about 500 parts in internal combustion engines, clutch systems, multi-stage gearboxes. All these are the main working units, which are also the least reliable – after long operation they require repair or replacement. Thus, it is profitable for the manufacturer to have maintenance services, on which they earn good money.

Electric motors initially have a long service life, as they do not have a large number of moving parts, and instead of a gearbox, a single-stage gearbox is used here. Repair, replacement of components in electric cars is made very rarely, and oil change, for example, is not necessary at all. For this reason, the manufacturer initially builds its maintenance losses into the cost of an electric car. 

Cost of raw materials and components

The history of production of internal combustion engine vehicles goes back more than 100 years. During this time, there have been well-established channels for supplying raw materials from mining sites to factories that manufacture components, as well as logistics for transporting parts to car assembly plants. For each automaker, communication between its body stamping, engine and other multiple parts plants is optimized to such an extent that production costs are generally kept to a minimum. 

When mastering the production of electric vehicles, the manufacturer can only partially utilize these communication channels. There is a problem of raw material supply. Many materials, raw materials used in the production of electric vehicles do not belong to the raw materials of mass production or their extraction is carried out in depressed regions, which affects the price of the material and contributes to an increase in the cost of the final product.