Ask ABG: Why are electric vehicles so expensive?

 

The two biggest issues around the subject of electric cars are probably the real-world range capabilities and the up-front cost. A reader pinged us today with the following question:

Why do electric cars cost so much? If you get rid of the engine and transmission, which costs 6 or 7 thousand plus, and add a $10,000 battery pack why are we paying $20,000 more than the car should cost? Clue me in – I must be missing something.

We did a bit of checking and some of the basic assumptions in this question are wrong. First off, the estimate for an internal combustion powertrain is pretty far off, nearly double the actual cost. Automakers don't talk on the record about how much components cost because they consider them trade secrets. However, we have been told on background that a typical, normally aspirated four-cylinder engine that would power a compact car like a Civic, Focus or Cobalt costs in the region of $2,000-3,000. This is the cost of manufacturing including materials, labor, etc. but does not include development. Similarly, an automatic transmission is about $1,000-2,000 and an electronic control unit is probably about $100-150. That puts the total in the $3,000-5,000 range.

For an electric vehicle of similar size, you need about a 24-26 kilowatt-hour lithium ion battery pack for a 100-mile nominal range. Again, manufacturers are cagey about hard numbers, but current estimates of battery costs range anywhere from about $650 to $1,200 per kilowatt-hour. That would put the battery cost at anywhere from $16,000 to over $30,000, although somewhere in the $20,000 range is probably a good ballpark figure for where the first EVs will cost. The $10,000 estimate the reader cites is the cost of the Chevrolet Volt's 16 kWh pack, one that only provides a 40-mile all-electric range.

However, that cost still doesn't include two other major components, the traction motor and the power electronics which probably add another $1,000-2,000 to the bill of materials. Add it all up and a $20,000 premium for first-generation EVs starts to look like something of a bargain. Plus, you will make up much of the price premium over the life of the car in lower operating costs. We know you don't want to hear it, but sometimes the truth hurts