By Allyson 
Electric cars have gained significant attention in recent years, yet the prevailing sentiment remains that they are too expensive. As someone who appreciates and owns electric vehicles (EVs), I share this concern. If you’re looking to purchase a decent family EV, you’re looking at a minimum of £25,000 for models like the BYD Dolphin or MG4. This price tag raises important questions: Why do electric cars cost so much, and when can we expect prices to decrease? The good news is that EV prices are poised to drop soon, and I’ll explain why this is the case.
Reasons Why Electric Cars Will Become More Affordable
1. Increased Production of Electric Cars
The market is witnessing a surge in the production of electric vehicles. Although demand for EVs took a dip last year due to various factors—including the British government’s decision to delay a ban on internal combustion engine (ICE) vehicles—manufacturers are ramping up production to meet upcoming regulatory mandates.
Under the Zero Emissions Vehicle (ZEV) mandate, car manufacturers must ensure that at least 22% of their offerings are purely electric by 2025, increasing to 100% by 2035. This regulatory pressure means more electric cars will be available in the market, creating competition among manufacturers. As a result, to differentiate themselves, many will lower prices, making EVs more affordable for consumers.
2. Growing Availability of Used Electric Cars
Another factor contributing to falling prices is the increasing availability of used electric cars. As more people lease or finance EVs—especially for company cars, which often come with tax benefits—many are now reaching the end of their lease terms. This influx of used EVs into the market means greater choice and lower prices for consumers.
Interestingly, while EVs have been criticized for high depreciation rates, this can actually work to the advantage of those looking to buy used. For instance, you can find a four-year-old Porsche Taycan for less than £45,000, a stark contrast to its original price. Similarly, a five-year-old Jaguar I-PACE can be had for around £20,000, down from its initial £70,000.
| Used EV Model | Original Price | Current Price | Age |
|---|---|---|---|
| Porsche Taycan | £90,000 | £45,000 | 4 years |
| Jaguar I-PACE | £70,000 | £20,000 | 5 years |
3. Tesla’s Market Influence
Tesla has a substantial impact on the overall electric car market. Last year, the company slashed the price of the Model Y by £8,000, prompting competitors to follow suit. Tesla’s pricing strategy has led to an average discount of over 10% off the list price for new EVs. This trend is making electric cars more accessible to a broader range of consumers.
Read More – America vs. Europe: The Supercar Showdown
4. The Rise of Chinese Manufacturers
Interestingly, Tesla was not the best-selling electric vehicle brand globally last year; that honor went to BYD (Build Your Dreams) from China. BYD has aggressively entered the European market, leveraging its lower battery production costs to offer competitively priced vehicles.
For example, the BYD Dolphin is priced around £13,000 in China, but due to import tariffs and taxes, it retails for about £25,000 in the UK. Despite the markup, this price is still attractive compared to competitors. As Chinese brands like BYD and GWM gain a foothold in Europe, expect them to drive prices down further, offering consumers more affordable options.
5. Traditional Car Makers Must Compete
European manufacturers face a critical challenge: they must price their electric vehicles competitively with their petrol counterparts. Currently, electric cars can be as much as 35% more expensive than similar petrol models, primarily due to the high costs associated with materials and development.
However, as battery production becomes more cost-effective, traditional automakers will be forced to drop prices or risk losing market share to competitors offering cheaper alternatives.
6. Decreasing Battery Costs
Battery costs have been on a downward trend for years. According to Bloomberg, EV battery prices fell by 89% between 2010 and 2020. This trend is driven by several factors:
- Economies of Scale: The more batteries that are produced, the lower the costs become.
- Localizing Production: Manufacturers are moving towards local sourcing of raw materials, reducing transportation and processing costs.
- Gigafactories: Major car companies, like Nissan, are investing billions in building gigafactories near their vehicle production facilities.
- Battery Recycling: Companies like Tesla have achieved significant success in battery recycling, ensuring that no batteries end up in landfills.
These advancements will lead to cheaper batteries, which will ultimately reflect on the prices of electric vehicles.
7. New Battery Technologies
The market is also witnessing the emergence of new battery technologies that can help reduce costs. Most EVs use lithium-ion batteries, which typically contain nickel and cobalt, driving up their prices. However, alternative battery types like LFP (Lithium Iron Phosphate) batteries are gaining traction. While these batteries may offer a slightly shorter range, they are cheaper to produce and are already being utilized by Tesla in their budget-friendly Model Y.
Conclusion
The future of electric vehicle pricing is promising. With an increasing number of electric cars being produced, a growing supply of used EVs, competitive pricing pressures from traditional and new manufacturers, and advancements in battery technology, we can expect to see significant price reductions in the near future.
As the market evolves, it is essential for consumers to stay informed and take advantage of the opportunities that arise from this shifting landscape. With any luck, we will soon witness a day when owning an electric vehicle will not require a second mortgage.
If you’re considering purchasing your own EV or petrol car, check out AutoTrader UK for the latest options and deals!
FAQs
1. Why are electric cars so expensive?
Electric cars are expensive due to high production costs, particularly associated with batteries and materials. However, increased production and competition are expected to lower prices.
2. Will used electric cars be cheaper?
Yes, as more leased electric cars reach the end of their terms, the market will see an influx of used EVs, leading to lower prices and greater choice for buyers.
3. How does Tesla influence EV prices?
Tesla’s pricing strategies, including significant price cuts on models like the Model Y, prompt other manufacturers to adjust their prices, resulting in overall discounts in the market.
4. Are Chinese EV manufacturers affecting prices?
Yes, Chinese manufacturers like BYD offer competitively priced electric cars, often at lower production costs, which pressures European brands to reduce their prices to remain competitive.
5. How will battery costs affect EV prices?
As battery production becomes cheaper due to economies of scale and technological advancements, the overall cost of electric vehicles will decrease, making them more affordable.
6. What is the future of battery technology?
New battery technologies, such as Lithium Iron Phosphate (LFP), are emerging and can reduce production costs while still providing reliable performance for electric vehicles.
7. When can we expect EV prices to drop?
With the current trends in production and competition, it is likely that we will see electric vehicle prices begin to drop significantly in the near future.