EVs heading into price ranges fit for mass adoption
Electric vehicles (EVs) are falling into the price range where experts say mass adoption can happen — and partially electrified hybrids are already there.
But meeting the Biden administration’s decarbonization goals will require added support for new supply chains and sources of key materials, in addition to a coordinated approach to a national charging network, experts said.
Lithium-ion battery prices are falling about 9 percent per year, and the cost of all cars is rising due to a combination of inflation, supply chain disruptions and the proliferation of new high-tech standard components such as backup cameras, blind spot sensors and lane assist.
That means luxury and mid-range electric vehicles are already similar in price to their fossil fuel-powered counterparts, several experts told The Hill.
The average price of a new car was about $47,000 at the start of the year. Many new EVs are now “right in line” with that, Matt Degen of auto review site Kelley Blue Book told The Hill.
The Ford F-150 Lightning electric truck, for example, began hitting roadways in late April with a retail price of just under $40,000 for the base model — and the possibility of an additional $7,500 tax credit.
And there is an increase in vehicles at that price point, Degen said, such as the Volkswagen ID.4 or the Toyota bZ4X. These join a field of mid-price EVs, a field that is getting more crowded as lithium battery technology follows the pattern set by laptop computers, cellphones and flat-screen TVs: expensive luxury items that gradually filter down to the mainstream.
“Are you going to find an EV as cheap as the lowest price Kia gas model? Not yet,” Degen added. “Nobody really has a crystal ball as to when you’re going to see a $20,000 EV. But if you want a sub-$30,000 EV, you can get one.”
But Ryan Robinson, who runs the automotive research group at Deloitte consulting group, says far more is needed to make serious carbon reduction gains.
One big problem is constricted EV supply chains: whatever its price, the F-150 Lightning is sold out. That keeps most EV activity confined to the luxury market, Robinson said.
“As long as the components are rare and expensive, and as long as you can only produce a small capacity of new vehicles, the carmakers are going to put more emphasis on that higher part of the market — where there are fewer people but you’ll turn more of a profit on every car,” he said.
That’s a problem: Deloitte’s research shows that most customers are looking for vehicles in a crucial $30,000 to $50,000 sweet spot, Robinson said.
“We’re just not going to get to our reduced carbon emissions footprint, you know, on the backs of how many $100,000 vehicles we can sell,” Robinson added.
The good news is that the Biden administration, numerous state governments and all the major carmakers are now spending big to modernize their battery technology, find new sources of critical materials and increase the scale of their production chains.
Those are already bearing fruit in the form of cheaper batteries, with the cost of battery packs now down to $118 per kilowatt hour. That is approaching the $100 threshold which the Department of Energy believes will lead to a rapid increase in mass adoption.
Those gains are largely invisible to consumers, however, because they’re packing more range into every new car, John Gartner of the Center for Sustainable Energy told The Hill.
“The overall cost is not going down, consumers are just getting more miles for the money,” pushing more and more EVs to the 300-mile threshold where their range is comparable to a fossil-fuel powered car’s gas tank, Gartner said.
Still, other factors are helping to drop overall price, he said.
“There’s billions and billions being invested by [carmakers] and battery companies in research and development,” he said, with much of it around new forms of mass production.
For example, car manufacturers have begun designing products based on a modular platform called the “skateboard,” which allows them to use the same rough body and battery propulsion system whether they’re making a sedan, SUV or light truck.
Last month, the Department of Energy announced more than $3 billion in funding to create domestic battery supply chains. Any such moves will lower prices by increasing supply, and because batteries are heavy, the less you have to ship them, the less they cost, Robinson said.
One key roadblock to domestic production, however, is the limited domestic production of key battery minerals — a supply chain largely controlled by China.
Degen of Kelley Blue Book pointed to proposed mining projects in California’s briny Salton Sea, where General Motors has invested millions into lithium mining proposals, as an example of a project that “could be a big boon” for domestic EVs.
That project will pull lithium from underground brine using geothermal energy. It aims to create “the greenest way to recover lithium that exists in the world,” as California Assemblymember Eduardo Garcia told reporters last year at the first meeting of the new state Lithium Valley Commission. By October, the commission plans to prepare a report on the way forward for a statewide lithium industry, according to the state government.
One big thing the administration can do is add tax breaks, in effect closing the price gap between EVs and cheaper gas-powered cars, Gartner of the Center for Sustainable Energy has said.
“Consumer incentives have been found to be very effective in motivating consumers to buy EVs,” Gartner told The Hill.
According to a 2018 survey of the California Clean Vehicle Rebate Program (CVRP), the Center for Sustainable Energy found that 54 percent or respondents said the federal tax credit was extremely important in their decision to purchase an EV.
One roadblock is Sen. Joe Manchin (D-W.Va.), a key vote on any clean energy package, who called the credits “ludicrous” in a recent Senate hearing.
For now, Degen said, cost-conscious customers can dip their toe into the battery-powered market with gas hybrids such as the new Toyota Corolla (which starts at $24,000) or the Ford Maverick (which starts at $20,000).
For around $30,000, customers can find plug-in hybrids such as the Kia Niro SUV, which runs on battery power for short distances but use gasoline for long-distance trips.
“Then when customers want to take a road trip across America, they can do that without having to worry about charging up every 300 miles,” Degen said.
For now, he added, customers are living in “a golden era” of choice. “You can still get a supercharged V-8 with a manual transmission that’s just gonna burn rubber all day. Or you can get an electric car that goes 500-plus miles on a charge,” he said.
Don’t expect that diversity to hold, however, Degen said. Mass EV adoption is coming — it’s only a question of when.
“Every automaker has pledged that ‘In X number of years, X amount of our fleet is going to be EV,’” he said. “Some are saying all of their fleets, some are saying you know, majority or half their fleets — but that’s where the industry is going.”