Why are electric vehicles so expensive?

The first ‘mainstream’ electric vehicle (EV) sold in Australia was the Mitsubishi MiEV in 2010.

It was a compact, 4-door hatch with a range of about 120km on a full charge.

When its battery was flat, it took roughly 7 hours to fully charge.

It’s performance and usefulness wasn’t all that great and compared to similar-sized cars on the market with internal combustion engines (ICE), that had twice or even three times the range from a full tank, the $50,000 plus price of the MiEV was staggering.

Take, for example, the other compact hatch in Mitsubishi’s range at the time - the petrol-powered Colt.

Similar in size to the MiEV, you could jump into the top-of-the-line Ralliart spec for little over $25,000 and get an average distance of 670km on a tank of petrol out of the punchy turbocharged engine.

The entry-level ES model would see you part with only 18,000 of your hard-earned dollars.

On the other side of the spectrum, for the $50,000 price tag of the MiEV, you could’ve purchased performance and luxury hot hatches such as the Volkswagen Golf GTI and had some money to spare!

So, why are EVs so expensive when compared to their ICE counterparts?

Well, as was the case in 2010, and is still the case now, it’s the price of the batteries and technology that power EVs that contributes to the high price.

The price of every EV, whether it be the Tesla Model X from $150,000* or the Hyundai Ioniq starting at $44,990*, has billions of dollars worth of research and development built into it.

The lithium-ion batteries used to power an EV are essentially the same technology used to power a laptop or smartphone, except much bigger.

Creating batteries of this size, that are capable of powering and integrating with a car, is very complex, meaning the development process can be costly.

Once the right battery has been developed, it needs to be manufactured at scale which, in the case of lithium-ion batteries, is very expensive too.

This expense has to be recouped through the sale of the vehicle, hence the price shock.

As EVs become more common, the process of sourcing the materials used in batteries, as well as the manufacturing of them, will be refined, causing the price of the final product to go down.

However, we could be waiting a while yet before we see an EV, priced under $35,000, that has good range and features, and that would appeal to your everyday Aussie.

*Prices are indicative only and are not inclusive of drive-away costs.