The Almighty Dollar Remains Electric Cars’ Biggest Obstacle
Electric cars are known as many things, but “affordable” isn’t one of them. Due to a crippling lack of readily accessible infrastructure, the high cost of technology, and the resulting public apprehension to making the leap from gasoline to electric, EVs tend to be far more expensive than their more conventional counterparts. Case in point, the Chevrolet (NYSE:GM) Volt.
Though the Volt is not a true electric car — rather, an extended-range, plug-in hybrid — it ran nearly $40,000 upon its release. Although the vehicle has come down in cost substantially, a conventional car of the same size and stature could likely be had new and loaded with options at a significant discount to the Volt.
While it’s no secret or surprise that EVs struggle on the pricing front, a recent survey has all but confirmed that there appears to be a $25,000 threshold for EVs that most buyers have great difficulty in breaching. The Electric Vehicle Consumer Survey conducted by Navigant Research found that prices higher than $25,000 are a major turnoff for many consumers. Of 1,084 respondents to the survey, 71 percent plan to spend less than that on their next vehicle purchase. Further, 43 percent are not planning to breach the $20,000 threshold, essentially eliminating the EV industry as a whole from their menu of options.
As the most affordable EV on the market, Nissan’s (NSANY.PK) Leaf compact car still weighs in at a little more than $22,000, and that’s after the federal tax credit and a $6,400 slash to the MSRP this year.
However, Nissan has seen a dramatic upswing in Leaf sales, indicating that if the price of an EV is deemed justifiable, there is ample demand to be had. The company recently boosted its production of the Leaf to accommodate the sales influx.
“Batteries make up half the cost of vehicles. We’re anticipating that battery prices will come down by about a third by 2020,” said Dave Hurst, the principal research analyst with Navigant Research. The firm is forecasting that EV shipments this year will hit 30,195 EVs and 59,106 plug-in hybrids. By the end of the decade, Navigant sees shipments of 130,641 EVs and 210,772 plug-in hybrids.