PHEVs and EVs to Cost Tens of Thousands More Than Gasoline Counterparts For Next 20 to 30 Years

By Eric Loveday

Eric Loveday

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Eric Loveday is a car enthusiast with a love for everything automotive. He purchased a 1970 Chevelle at age 16, quickly outgrew its dated engineering... More

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10,885 views Dec 18, 2009

Chevy Volt

We are all well aware that EVs, PHEVs, and hybrids cost automakers more to produce than comparable gasoline powered cars.  Barring incentives and automakers selling vehicles at a loss, they will also costs consumers significantly more to purchase for a long time to come.  But just how much more do these advanced vehicles cost?

A new report released by the U.S. National Research Council, a division of the National Academy of Sciences has some startling findings that suggest that these vehicles cost a lot more than many people are lead to believe.

According to the report, vehicles such as the Chevy Volt and other PHEVs with their complex drive trains are at least 20 years away from widespread adoption in the States.  Acceptance of these vehicles will require billions of dollars in government subsidies.

Additionally, the report suggests that EVs with moderately sized batteries will still cost $10,000  more than comparable gasoline vehicles until at least 2030.

Here are some of the findings.  A car like the Chevy Volt with a battery that delivers 40 miles of electric range but also incorporates a gasoline engine will command a cost premium over gasoline powered vehicles.  The cost premium is expected to be about $18,000 by 2011 and slowly falling to $11,000 by 2030.  That cost premium falls significantly for vehicles with less electric range and smaller batteries.  For example, PHEVs with 10 miles of electric range will cost $6,300 more in 2011 and only $4,100 more by 2030.

The report suggests that high costs will lead to slow adoption rates of PHEVs.  As the report suggest, only 4% of the U.S. fleet of vehicles will consist of PHEVs by 2030.   PHEVs with 10 miles of electric range will have an average price of $28,000 and PHEVs with a mile electric range will have an average price of $38,000 by 2030.

With high costs, will a vehicle such as the Chevy Volt ever make economical sense to a consumer?  Will the high purchase price ever be offset by the fuel saved and reduced operating costs?  The report finds that PHEVs with a 40 miles electric range are unlikely to become cost effective before 2040, but those with a 10 mile range may become cost effective by 2030.

Why are costs of advanced vehicles so high and why aren't prices expected to fall quickly? According to the report, "Lithium-ion battery technology has been developing rapidly, especially at the cell level, but costs are still high, and the potential for dramatic reductions appears limited, government subsidies of tens to hundreds of billions of dollars will be needed to make PHEVs cost-effective."

Costs are always an issue with new technology.  Costs will slowly drop as technological innovation spreads across the industry.  However, this report suggests that costs will fall slowly, perhaps too slowly for these advanced vehicles to survive.  With PHEVs and EVs still  costing tens of thousands of dollars more than their gasoline counterparts by 2020, consumers may be unwilling to make the investment.  Government subsidies and incentives, as the report suggests, could be the only answer for some time.

Source:  National Research Council