8 Reasons Why Electric Cars Are So Expensive


Tesla - Electric Car

Why Electric Cars Are So Expensive?

Electric cars are still somewhat new to the car market and because of this, they will demand a premium. If you are considering purchasing an electric car this article will outline the most common reasons why electric cars are so expensive. That way you can think about the total ownership costs of an electric car.

Electric cars are mainly so expensive because of the development costs associated with bringing new technology to the market.  Those development costs will end up being passed down to the consumer in the way of a higher overall vehicle price.

Since electric cars are now becoming more mainstream electric car prices should start to come down as the manufacturing costs will be reduced the more electric cars are produced and the more auto manufacturers will be able to reduce the costs of electric cars for consumers.

1. Electric Car Range Issues

If you are looking to purchase an electric car you may be concerned about the range that you are able to get on a single charge.  This is not something that you typically have to worry about in a gasoline-powered car as you can just go to the gas station to refill your tank.  However, this is something that you have to take into consideration when buying an electric car.

If you decide on going with a long-range electric car you can expect that to reflect in the total cost of the vehicle.  To be able to achieve a longer range the battery pack in the car will have to be larger. The larger the battery pack in your car the more you can expect to pay for the car.  The vehicle manufacturers will not just eat the cost of the larger battery pack.

The nice thing about this at least with Tesla cars is that you can choose which battery pack is suitable for you.  If you only plan on driving your car around town you can go with the base battery pack. If you plan on taking your electric car on longer trips you can buy the extended range battery pack.  

2. Costs to install 240V outlet

If you plan on charging your car at your home then you likely will want to install a 240V outlet in your garage.  Most outlets in your home are 120V outlets and while those are fine to charge most electronics they won’t be able to provide that much juice to an electric car.

Charging a Tesla with a 120V outlet will only provide you with 3 miles per hour of charging time.  In contrast, when charging a Tesla on a 240V outlet you can fully charge a Model S or Model X in about 10 hours.  This comes out to about 27 miles per hour of charging time.

If you plan on using your electric car be it a Tesla or other electric car to commute more than 15-20 miles a day you will likely want to upgrade your charging outlet to 240V.  You can get by with a standard 110V outlet but if you take a long trip you are going to have to park your car for a long time to bring it back to a full charge.

It makes it more practical to have a 240V outlet so that you can quickly charge your electric car after small trips around town or after long trips.  You don’t want to have to park your electric car for a full day to charge it after a long weekend trip. Having a 240V charger will keep you from having to do that.

3. Vanity Plate Costs

Many people that own electric vehicles also want to let other people know their good deeds in helping the environment.  This leads to vanity plates like N0 OIL, GAS L0L, and Ch4arged. Those vanity plates don’t come cheap either, expect to pay a fee on top of your normal plate costs to purchase a vanity plate.

Maybe you won’t feel the urge to express to the world the good deeds that you are doing to help the environment with your electric car purchase.  If that’s the case you won’t have to worry about paying extra for a vanity plate. But most people I’ve seen that can afford a Tesla have a vanity plate.

4. Electric Technology Development Costs

Electric cars are still new developments to the car world and because of this electric car technology is still evolving and being developed.  Over time the costs to make electric cars should start to go down but currently, there is still a high barrier of entry to build an electric car because of the costs associated with making an electric vehicle.

With that said someone is going to have to foot the bill for these development costs and some of that cost is going to be passed onto the consumer.  Electric car manufacturers will do their best to make the prices of their electric vehicles as cheap as possible even to the point of not making a profit off the sale of their electric vehicles.  

Even with electric car makers eating the costs associated with developing electric vehicles some of those costs will make their way onto the consumer.  You can expect to pay a premium when buying the same model car as an all-electric car instead of going with the internal combustion engine model car.

This is because internal combustion vehicles have been around a lot longer than electric vehicles and the costs associated with developing an internal combustion engine have gone down over time.  Electric cars won’t be as expensive down the line as more and more electric cars are produced.

Development costs and new technology is also another reason why car payments keep going up year over year.  The average monthly car payment is now over $500 a month for US auto loans.  To learn more about why car payments have been on the rise recently check out my other article.

5. Battery Technology Costs

Battery technology has been a hindrance to electric vehicles for a while now but seems to be getting better as more electric cars are produced. The development costs to create new battery technology is going to trickle down to the consumer until the technology to make better batteries becomes cheaper. 

Elon Musk has realized this and created a battery gigafactory with the help of Panasonic to pump out more batteries but they still are not cheap to make at this time.  Like with electric car technology the costs associated with creating batteries for electric vehicles should go down over time as new developments are made.

Currently, though battery development costs are going to add to the overall costs of the vehicle to produce and are another reason why electric cars are so expensive to buy.  This is going to affect the bottom line of the profitability of the vehicle which is why a lot of bigger vehicle manufacturers have been shying away from trying to produce electric vehicles up until this point.

6. Other Costs Associated with Electric Car Technology

Electric cars while not having many moving parts will still have components that will wear down or break over time.  It’s not uncommon to hear of having to replace the battery packs on electric cars from time to time over the life of the car.

As you can imagine replacing the battery pack on an electric car is not a cheap fix. Replacing the battery pack on a Tesla Model S costs $12,000 which at that price can buy you an older Honda Civic.  If you like being on the bleeding edge of technology you should expect to pay a premium.

Electric cars are still a new technology and as such, they are going to cost a pretty penny to fix if things do go wrong.  Which is just another reason why electric cars are so expensive to maintain.

7. New Safety Features

An electric car like the Tesla Model S and Model 3 come equipped with advanced safety features that come standard.  Usually, when new safety features come standard it’s going to increase the overall costs of the vehicle, and that’s another reason why electric cars are so expensive.

Teslas will come with crash avoidance features that can detect a crash in front of the vehicles in front of you.  It can then apply the brakes on your car to keep you from crashing into the vehicle in front of you. These new safety systems are not cheap to develop.  

Someone is going to have to pay the development costs of safety technology until it becomes more mainstream.  These costs will trickle down to the consumer and will be integrated into the cost of the electric vehicle.

Below is a video showing that technology in action.

8. Costs to Recharge the Car

After using an electric car you are going to have to charge it up somewhere to be able to use it again.  If you are able to charge up your electric car at work for free or can find an outlet to charge up then you are all set.  

However, if you are planning on charging up your car at home or your work makes you pay to charge your electric car there are going to be costs associated with charging up the car.

Tesla allowed first adopters of their vehicles free charging at their supercharging stations but has since removed this perk from people buying Tesla Model 3 sedans.  I don’t really blame them as the more people they have charging their cars for free the more they are going to have to pay out of pocket in electricity fees.

While you could argue that the cost of charging your car is less than the cost of having to fill up your car with gasoline, the fact is that it still will cost someone money to charge up the vehicle.  You will need to factor in the electricity costs into the monthly costs of maintaining an electric car.

Related Questions

Are electric cars more cost-effective?  With electric cars, you will pay more upfront for the car when compared to a gas-powered car.  But you won’t have to pay for gasoline while you own the electric car so this will save you money the longer you own the electric car.  

If you are the type of person that likes getting a new car every few years you are better off going with a gasoline-powered car.  The gasoline savings that you will get with an electric car will break even with the additional costs upfront that are associated with buying an electric car.

If you don’t plan on owning the electric car for over 5 years you are likely not going to save any money by going with an electric car.

Do you really save money with an electric car?  You will save money in the long run with an electric car as long as you don’t have to keep paying to repair the car.  Electric cars are still a somewhat new technology and still have to have repairs done to them. It’s not unheard of having to replace the battery packs on electric cars.  

If this happens to your electric car you are likely not to save any money over a gas-powered car.  But the same thing could happen to your gasoline-powered car. You could blow your engine on your gas-powered car and be out a few grand to replace it.  

Replacing a battery pack is similar in costs to replace a car engine.  Electric cars use electric motors and these sometimes also need to be replaced.  Theoretically, if you don’t have to repair your electric car over the period of ownership you should save money.

Why are Tesla cars so expensive?  Tesla cars are expensive because Tesla is still a new car company.  With new car companies, they are going to have to pay to develop their new car models.  As the new car company is able to produce more and more cars they are able to bring their development costs down.  

Tesla is trying to get to the point where they can produce affordable electric cars with their Model 3.  It is the first Tesla model that can be purchased for $35,000 which is somewhat affordable. If Tesla is able to keep selling cars they should be able to keep offering lower-priced vehicles.

Another reason Tesla cars are so expensive is the amount of technology that is built into their cars.  They offer cars with autopilot technology that allows the car to drive itself with minimal human input.  This technology is not cheap to develop and is present in all new Teslas that are being made as of spring 2019.  

Teslas also have a massive touch screen in all of their cars that dwarf the typical touch screens present in most new cars.  Adding in that large of a touch screen is going to add to the overall costs of the vehicle. Teslas also have a lot of standard safety features that will increase the costs to purchase their cars.

When will electric cars be affordable?  Electric cars will start to be affordable as more and more electric cars are made and sold. Developing the technology for electric cars is not a cheap endeavor. As more and more electric cars are produced electric car makers are able to bring down the costs of producing electric cars as the technology becomes more mainstream.

By 2020 or 2021 electric cars will become cheaper to produce.  These savings will then be passed onto the consumer. The more car companies that decide to make electric cars will bring down the costs as well.  The more car companies that are competing to sell electric cars will eventually bring the costs down. Competition may not be good for car companies but is good for consumers.

Why are electric car batteries so expensive?  Electric car batteries are so expensive because batteries are still not cheap to produce.  An electric car battery pack is really just a bunch of smaller batteries strung together. This means that if one of those battery cells goes bad it will need to be replaced.  

Usually, when this happens it may be recommended to replace the entire battery pack.  If you have the knowledge to work on your own car and electronics you could potentially diagnose the battery pack issue yourself.  

I’ve seen reports online of a guy that removed his Prius battery pack himself and replaced a battery cell that had gone bad.  Toyota quoted him a few thousand dollars to replace the entire battery pack. He only had to pay a few dollars for the battery cell so he saved himself thousands of dollars by repairing it himself.  

Why Electric Cars Are So Expensive – In Conclusion

Hopefully, by now you have a good understanding of why electric cars are so expensive to buy.  The development costs associated with bringing electric cars to the market have to be paid by someone.  Automotive manufacturers will eat some of the cost of developing new cars but some of that cost will also be passed down to the consumer.  Luckily electric cars should become cheaper down the line as more and more are made.

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