Why Are Electric Vehicles So Expensive?

The Mitsubishi MiEV was the first 'mainstream' electric vehicle (EV) sold in Australia, debuting in 2010. This compact, 4-door hatchback had a range of approximately 120 km on a full charge, and recharging its battery took about 7 hours.

Despite being a pioneering EV, the MiEV's performance and practicality were limited. It faced tough competition from similarly-sized internal combustion engine (ICE) cars, which offered double or triple the range with a full tank. At a price exceeding $50,000, the MiEV seemed exorbitant.

Consider the petrol-powered Mitsubishi Colt, another compact hatch available at the time. Comparable in size to the MiEV, the top-of-the-line Ralliart version cost just over $25,000 and delivered an impressive 670 km on a tank of petrol with its powerful turbocharged engine. The entry-level ES model was even more affordable at $18,000.

For the MiEV's steep price, you could have opted for performance and luxury hot hatches like the Volkswagen Golf GTI and still had money left over.

So, why do EVs remain more expensive than their ICE counterparts? The answer, as it was in 2010 and continues to be today, lies in the cost of the batteries and technology that power these innovative vehicles.

Every electric vehicle (EV), from the Tesla Model X starting at $150,000 to the Hyundai Ioniq at $44,990, incorporates billions of dollars in research and development costs. The lithium-ion batteries powering these vehicles are essentially scaled-up versions of those used in laptops and smartphones.

Developing batteries of this size, capable of effectively powering and integrating with a car, involves a complex and costly process. Once a suitable battery is developed, it must be manufactured on a large scale, which is also expensive for lithium-ion batteries. These costs are reflected in the vehicle's price, leading to the initial price shock.

As EVs become more widespread, improvements in sourcing materials and refining the manufacturing process are expected to drive down costs. However, it may take some time before we see an EV priced under $35,000 that offers a good range and features appealing to the everyday Australian.

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