Easterns Blog

Electric vehicles are so expensive because they are costly to produce and they are seen as high-value luxury items, so the premium price tag is validated by many purchasers.

Consumer perception has a large effect on the cost of electric vehicles as well. People are willing to pay more for an electric vehicle because they believe they can save with them long term. This allows brands to continue to market electric vehicles as having a higher value than their gas car counterparts.

Beyond these reasons, supply and demand are affecting the current price of electric vehicles. With more gas vehicles than electric vehicles in production, EVs have higher manufacturing costs with a limited supply of the materials needed to produce them. This contributes to the premium price tag for electric vehicle car shoppers.

Why Are EV Batteries So Expensive?

A large part of the high cost of electric vehicles is from the EV batteries. Batteries can range from $4,000 to $20,000, depending on your make and model. The materials that make up EV batteries are more expensive than those in traditional cars because they are larger and can hold more energy. 

While innovation is allowing EV battery manufacturers to mediate costs by making the parts with different materials, they are still significantly pricier than their gas vehicle counterparts. It is also costly to invest in the research to develop alternative materials and methods for producing batteries for electric vehicles, which has continued to inflate the cost in recent years.

Low Supply Causing High Purchase Rates

Supplies are also affecting the cost to build electric vehicles, which is inflating the purchase price. Currently, there is a computer chip and semiconductor shortage, which are essential parts for electric vehicles. In some cases, this is stifling manufacturing’s ability to meet EV demand.

Additionally, the supply of neon is crucial to the laser tech used to create semiconductors. Neon is generally sourced from Ukraine, which is currently undergoing its own war and political disarray, directly affecting its economy and production of goods.

Luxury Brands Are Producing Electric Vehicles as Flagships

Another contributor to the high cost of electric vehicles is that many luxury brands manufacture them. Brands like Tesla, Rivian, Mercedes and BMW dominate the electric vehicle market, which inflates the perceived cost, as well as the actual cost of EVs.

As more luxury brands create electric vehicles as their flagship automobiles, people are becoming used to seeing EVs in a certain price range. This has the added effect of allowing them to maintain that price range, even when they are manufactured by more affordable car lines.

Another issue is that luxury lines may not offer gas vehicles to give them a comparative pricing point for their electric vehicle lines. This means that not only are luxury brands able to market electric vehicles at a premium price because of performance and design, but the prices are competing with other luxury vehicle models.

This means that EVs are being sold primarily as luxury vehicles, which in some cases they are, and it warrants a luxury price tag.

How Are Individuals Affecting EV Prices?

Individuals are a key factor in the increasing prices of electric vehicles. Consumer opinion affects the price and the value assigned to goods and services. This is no different within the traditional car market.

Electric vehicles are often marketed as luxury items intended to help consumers save money over time on fuel costs. This has the effect of increasing their perceived value, so people expect to pay more money up front for the future savings.

Not only does this allow brands to charge more, but it’s partially the basis for why prices are still increasing. As the price of gasoline trends up people begin to see more value in electric vehicles, which reinforces their willingness to pay premium prices. This encourages even non-luxury brands to charge what they feel their electric vehicles are worth, with relatively little pushback from their consumer base.

Shop Used Cars at Easterns Automotive

Visit us at one of our eight locations to shop our comprehensive inventory of pre-owned vehicles, including gas, hybrid and electric models, at a competitive price.

We offer financing and trade-in credits and will work with you to simplify the car-buying process. Give us a call at 877-867-0641 to see how we can help.