There’s an old saying that asks whether you should “put the car before the horse” and another that asks whether you should “count your chickens before they’re hatched.” Both of these old sayings remind us that we shouldn’t expect the support structure or massive production changes in any industry prior to items proving they are going to work and survive. Unfortunately, the electric vehicle is currently in this position as more of them are being built for the market. Until these vehicles have a larger share of the market, there may be troubling waters ahead.
What Kind of Trouble Could be Ahead for the Electric Vehicle?
When you head to the grocery store, do you choose organic food because it costs less than the regular food? Not at all, in fact, if you were to choose the food that’s not labeled organic, you’d spend a lot less to have the food you want to eat. The same thought process can be applied to the Electric Vehicle market. While these vehicles are going to provide us with more clean mobility solutions and a variety of models that are either hybrid, plug-in hybrid, or completely electric in nature, they will cost more to produce in the short term.
Electric Cars Cost More to Produce
Because of the technology involved and the added production lines required to build cars that have EV powertrains, an electric car costs nearly $9,000 more to produce than a traditional internal combustion vehicle. Even those models that make use of an engine with the added benefit of hybrid or plug-in hybrid features, cost more to produce. This increase in costs is nearly $5,700 per vehicle. Before the cost is lowered of batteries and the EV powertrains needed to produce these vehicles, they are likely to sell at a higher premium.
What Does This Mean for the Market?
Every major automaker has made significant investments in the development of electric vehicle technology and battery production. This means that many expect this technology to be the future and with the stricter emissions regulations that are being added, electrification is the future. Unfortunately, until the market levels off, automakers can sell their electric cars at a loss or sell them for higher prices which would only entice those that are committed to driving an EV model because of the environmental protections offered.
Where do You Stand?
Right now, the most popular EV models on the market are the Chevrolet Bolt, Nissan Leaf, and Tesla Model 3. Other EV models are on the way and will make up a significant part of the vehicle offerings we see at dealership lots around the country. The question isn’t as much about where you stand, but more about whether or not automakers can actually offer these cars and operate at a loss for the sales until the need for the technology is significant enough to reduce the price to produce these cars. The next decade in the automotive industry will tell us more and, hopefully, lead us to more affordable EV production costs.