Are EVs affordable? The factors that drive up their cost

With all the discussions about new and innovative EVs there’s a particular emphasis on the latest technologies, premium quality, vehicle range, but we’ve not yet had the discussion about affordability. 

Thanks to the incredibly high cost of EV batteries due to the short supply of critical resources, the price of purchasing an electric car compared to an internal combustion engine (ICE) model is relatively high. This leads us into the question of affordability. What defines an affordable EV? What are the reasons for high EV prices? How will the industry overcome this challenge? 

As usual, we speak to the industry to find our answers and, in talking to experts from the automotive sector, we learn a lot about the current changings in this landscape and how they will adapt to meet the growing demand for affordable passenger cars. 

David Browne (DB), CEO of Smart UK, commented on what affordability really means and how this is impacted by the supply chain. 

Key takeaways from this conversation ​​​​​​​

The EV landscape is rapidly evolving, but challenging conventional metrics of affordability. While the initial price tag remains a paramount concern for the majority, a more nuanced understanding of cost emerges considering the total cost of ownership—encompassing everything from maintenance to emissions charges. For many, monthly expenses and the possibility of home charging—potentially from renewable sources—paint a clearer picture of long-term affordability.

EVs are seen to be more costly than their ICE counterparts. This perception is rooted in the early positioning of EVs as luxury commodities. However, as the market expands, this gap is consistently narrowing. Many modern EVs, armed with top-tier specifications, are now competitively priced alongside, if not better than, comparable ICE vehicles.

Consumers' expectations from affordable EVs have also evolved. Beyond just being cost-effective, they demand advanced tech, space, substantial range, rapid charging, and the hallmark torque-driven acceleration of EVs.

Addressing the elephant in the room—battery costs—manufacturers can realign strategies. Rightsizing batteries, rather than super-sizing them, can address both range concerns and cost challenges. Education plays a pivotal role: informing consumers about optimal battery choices can lead to better driving experiences without unnecessary premiums.