The high cost of an EV is often cited as a key barrier stopping drivers switching to an electric car and this has now been quantified by new research.
A large study commissioned by the AA and Electrifying.com has found that 81% of people think that EVs are still too expensive for them to afford one. At the same time the majority of people did not know about several government grants and tax breaks aimed at making EVs more affordable. Of those surveyed 69% had not heard of the UK governments company car tax break, aimed at saving employees thousands of pounds if they choose a fully electric company car.
63% of people had also not heard of the UK Plug-in Car Grant that they would benefit from if they bought a new EV, saving them £2,500 on electric cars under £35,000. However the difference in price between new EVs and comparable Internal Combustion Engine (ICE) cars is often much higher than the government grant.
For instance the cheapest Renault Clio currently available is just over £16,000, while the electric equivalent the Renault Zoe is more than £10,000 more expensive at £27,500 including the government grant. Similarly the lowest trim Vauxhall Corsa is £16,800, but the full EV version: the Corsa-e is £21,700 almost £5,000 more expensive, even with the government grant.
However some consumers may not be aware of the much lower running costs of an EV that can offset the price of purchase. The cost of home charging has fallen dramatically in the last few years, thanks to the introduction of new smart tariffs such as Octopus Go which offer much lower electricity costs, if you charge overnight when power is cheaper. This can reduce the cost of EV driving to 1p per mile, at least ten times cheaper than most petrol cars. For the average UK driver doing 10,000 miles a year they could save over £1,000 on fuel costs each year, which would pay back the extra cost of the Corsa-e in 5 years. However many consumers do not seem to include this fuel saving in their calculations, even when spreading the cost of a purchase over several years with finance.
At the same time, many car manufacturers blame the high cost of batteries for the reason that EVs are still so much more expensive than their ICE equivalents. However recent research by Bloomberg showed that the cost of Lithium batteries has dropped by 89% in 10 years from $1,100 per kWh in 2010 to $137 per kWh by 2020. It is generally believed that once Lithium batteries reach $100 per kWh (now expected in 2023) it will cost the same to create the average EV battery pack as an ICE engine. In theory this would remove the final cost difference in EV construction and leave car manufacturers with few obvious excuses to keep EV prices so high.
With cost reductions like this expected in the next couple of years, we could hopefully see a tipping point reached where the EV price barrier is removed for many consumers. Furthermore if the traditional car companies are too slow to pass on these cost savings to EV customers, then they could lose out to new challengers such as Tesla and Rivian who are reportedly close to breaking through the $100 per kWh barrier!