Electric cars have become popular in India in the last decade; they are also pretty expensive.
The price of an electric car is almost double that of a similarly-sized gasoline vehicle, and if you want to find out why? read on.
Factors that influence the expense
We need to grasp the fundamental function of a battery-powered vehicle to fully understand the price disparity between an electric and a conventional car. EVs are different from their traditional counterparts. The complexity of a battery-electric vehicle reduces with the absence of internal combustion (IC) engine and numerous other mechanical parts.
Let’s see why owning an electric vehicle is expensive.
- Three essential parts make up an EV: the battery pack, the electric motor, and the transmission.
- The battery pack is the most expensive of the three parts. The battery is crucial for storing electrical energy and causes the high cost of battery electric vehicles (BEV).
- Lithium-ion technology is currently used in battery-powered vehicles and has been around for a while
The entry-level variant of Mahindra e2oPlus begins at Rs 7.48 Lakh and goes up to ₹ 11.49 Lakh. Prices for the Tata Tigor EV in New Delhi range from Rs. 12.49 lakhs to Rs. 13.64 lakhs ex-showroom. Its other popular make, the Tata Nexon EV price starts at INR 14.79 Lakh and goes up to INR 17.40 Lakh.
Given that the price of a 1 kWh lithium-ion battery pack capacity ranges between Rs 15,000 and 20,000, an average EV battery for your EV will cost between Rs 5.5 lakh and Rs 8 lakh. For instance, the Tata Nexon EV Battery Pack will cost between 5.50 and 6.20 lakh rupees in India. Hence, the battery pack contributes around 40% to the total cost of the product.
The next question is, “Why are lithium-ion batteries so expensive?” It’s because the materials needed to make these batteries are expensive. Here are some of the explanations for EV batteries’ high prices.
- EV batteries need rare earth metals like lithium, cobalt, and nickel, but they are hard to come by.
- Metals must first be mined and processed.
- About 30% to 40 % of the price of an electric car is from the cost of a battery pack.
Somehow, the main barrier preventing automakers from achieving a price balance between EVs and conventional cars is the complex lithium-ion battery technology.
That said, the battery is not the only consideration. We will go over a few other factors with more clarity straightaway.
Other elements that impact an EV’s price
The price of an electric car has increased in more ways than just the battery. In comparison to vehicles powered by internal combustion engines, EVs are more expensive for many reasons. Some elements that contribute to the high purchase price of battery-powered automobiles are listed below.
The research and development of an EV take a lot of time and money from automakers. Every part of an electric vehicle is customized, from the auto components to the battery. Therefore, the production cost must get covered. So, the automakers have no choice but to raise the price.
A portion of the cost is for development. The development of cars has cost billions of dollars and has lasted a very long time.
Raw material and imports
The next aspect is the raw material used to make this car type. The raw materials have changed due to the new requirements, and not all materials are readily available. Developing an electric vehicle that can run is the first step. After that, you can try to produce something that could replace the raw material with a less expensive solution to lower the cost of raw materials.
The main problem with these raw materials is that, in addition to being more expensive, they are frequently scarce and restricted to specific geographical areas. During the 2018-2019 fiscal years, India imported lithium-ion batteries worth $1.23 billion.
Transmissions and electric motors cost a lot of money. Many businesses import EV parts from China and other nations due to the small size of the electric vehicle industry.
The imports primarily consist of a drive, steering, and electrical components from China. India lacks the necessary technology to produce these parts. You pay significantly more for your electric car than you would if it were a gasoline- or diesel-powered vehicle due to the high import duties on these components.
In contrast with a conventional car, an electric vehicle’s operating system may be straightforward. But producing an electric vehicle requires sophisticated and highly complex technology.
High-capacity batteries, electric motors, and so forth need to be managed by sophisticated electronic systems. Advanced driver assistance features are also available in some battery-electric vehicles. Therefore, BEVs are much more expensive than conventional vehicles.
Skilled personnel shortage
Technology for electric vehicles is still developing. As a result, there aren’t enough qualified workers available to make these vehicles. It has an unintended effect on the price of a battery-powered EV overall. Additionally, having a sustainable car is costly due to the shortage of skilled mechanics to repair such vehicles.
Car insurance premiums
Considering how expensive electric cars are. The cost of car insurance is on the steep side too. In light of this, insuring an electric vehicle is more expensive than insuring a petrol or diesel vehicle.
Because a battery-powered car has intricate electrical components, you might also need to buy particular accessories to protect those parts. Consequently, the extra cost may increase considerably. Whenever the battery costs reduce, consider the insurance cost may go down.
Even so, you can save money on premiums by avoiding the expense of agent commission and other processing fees if you buy insurance online. You can quickly and without any paperwork do your electric vehicle insurance.
When could electric cars become budget-friendly?
We are not sure yet. The price of battery technology is the biggest obstacle for EV manufacturers. The advancements in the automotive sector may lower the cost of car batteries. But it’ll be a while before that happens. We cannot anticipate price parity between conventional and electric vehicles before that time.
Automobile manufacturers also need to find less expensive replacements for other EV parts, apart from the costly battery technology. Everything must be efficient and affordable, from manufacturing to infrastructure. The price of electric cars may eventually match those of their conventional counterparts only afterward.
There is no doubt that electric cars are expensive in the existing conditions. And yet EV technology has advanced significantly, making them a practical option. As such, the initial cost to purchase such a vehicle might leave you broke. However, for the time being, the government incentives and benefits on EV purchases should reduce the setback.
The Manufacturers are working to create new technologies that will lower the cost of battery-powered vehicles. The fact is eco-friendly cars are less expensive to operate and maintain than gasoline or diesel vehicles.
As a result, you will eventually save on running and maintenance expenses to offset the initial investment. In conclusion, even though EVs are more expensive, the long-term advantages still make them worthwhile investments.
By 2030, the government’s ambitious goal of having all-electric vehicles sold in India indicates there could be a drive down in the price of batteries and other parts. It could make them more affordable than traditional vehicles. Meanwhile, you might only want to think about driving an electric car if you prefer a vehicle with less noise, no emissions, and fuel efficiency than traditional versions. Additionally, given how rapidly battery technology is developing, don’t be shocked if they become more affordable in a few years.