As President Joe Biden and U.S. automakers pledge to boost the number of zero-emissions vehicles to half of all industry sales by 2030, a key challenge remains: persuading Americans they can afford an electric vehicle, which historically have cost far more than conventional fuel-powered cars.
Experts say that’s no longer an impossible dream now that industry giants including Ford and GM are investing billions in EVs, as the vehicle segment is called, driven by fierce competition with Tesla, BMW, Hyundai, Toyota, Honda, Volkswagen and others.
Electric, hybrid and plug-in hybrids accounted for 8.2% of all light vehicles sold in the U.S. in the first half of 2021, according to Wards Auto Intelligence. Electric vehicles accounted for 2.3% of those sales, hybrids 4.9% and plug-in hybrids 1%.
The goal is for prices to eventually drop below gasoline-powered vehicles.
“Regardless of who has been in the White House, automotive industry leaders have seen the writing on the wall for some time now when it comes to electrification and autonomous technologies,” Jessica Caldwell, executive director of Insights from industry watcher Edmunds, said in an emailed statement.
Automakers hold “themselves to much more aggressive commitments and timelines regardless of mandates or policy because they know how critical it is” to compete, Caldwell said.
The lowest-priced EVs on the market (including delivery fee) are a Mini Cooper SE at $30,750, a Nissan Leaf at $32,620 and a Hyundai Ioniq Electric at $32,620, according to Edmunds estimates posted June 8. Prices include a “destination fee,” or the amount charged for delivery. For higher-end EVs, the Tesla Model 3 sells for $41,190, a Ford Mustang Mach-E goes for $43,995 and a Tesla Model Y is $53,198.
A February chart from industry publication Inside EVs shows a 2022 manufacturer’s suggested retail price range from about $23,000 for a BMW Mini model to more than $178,000 for a Porsche.
Hybrids are a little less expensive, according to Edmunds. Hyundai’s Ioniq plug-in hybrid costs $27,705, Toyota’s Prius Prime $29,195 and Kia’s Niro Plug-In Hybrid goes for $34,395.
One possible selling point for consumers? Lower maintenance costs. EV fuel savings alone can reach more than $4,700 over the first seven years of ownership, according to a recent analysis from Consumer Reports. With just 20 moving parts in an electric car, maintenance over the lifetime of the vehicle can range from $6,000 to $10,000.
The $3,000 car
Even with federal subsidies and other discounts for some EV models expiring, prices are expected to drop sharply in the years to come. Don’t be surprised if prices eventually come down to $3,000 to $5,000 per vehicle, Morgan Stanley analysts wrote in a March note to investors, likening combustion-engine cars to horse-and-buggies at the turn of the 20th century.
The last full year before Ford’s Model T revolutionized manufacturing with assembly-line design, there were some 255 automakers, and the average price of a car was $2,834 — about $80,000 in today’s dollars. Changes in manufacturing for EVs equivalent to that for the Model T could bring the same massive shift, according to the investment bank, which tracks the auto sector for investors.
“We would not be at all surprised to see the prices of many EVs eventually fall to below $5,000 a unit,” the analysts wrote, citing January remarks by Shigenobu Nagamori, CEO of Japanese electric motor-maker Nidec. Nagamori predicted an era in which electric cars sell for about $3,000, and pointed to China’s existing $4,300 electric vehicle.
In June, GM boosted its annual investment in EVs and autonomous vehicles to $35 billion from a goal set just last year of $27 billion. Ford is investing $30 billion in these technologies through 2025.
More money for infrastructure, like charging stations, also could make EVs less expensive, analysts said..
“The changes we’re seeing in the automotive system are the greatest in more than 100 years,” said Jim Burkhard, who follows oil markets, energy and mobility for IHS Markit, as EVs win both the capital allocation and regulatory battle, particularly in Europe.
Still, he noted, about 10 million EVs are on the road today versus 1.3 billion oil-powered vehicles.