Electric Car Buyers: Still Put Off By Price

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Electric Car Buyers: Still Put Off By Price

Antony Ingram

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It appears that one of the perennial sticking points of electric cars is still putting off buyers.

Not range anxiety, but pricing.

In the Energy Information Administration's Annual Energy Outlook 2012 report, it suggests that buyers aren't confident that they'll see any payback from the high initial purchase prices common to most EVs.

The report states (via ECT.coop), “Although consumers may value high-cost battery electric vehicles for a variety of reasons, it is unlikely that they can achieve wide-scale market penetration while their additional purchase costs remain significantly higher than the present value of future fuel savings."

6,200 EVs per manufacturer by 2015? Or half a million?

Even if gas were to rise to $6 per gallon, buyers would still be unlikely to see payback within a five-year ownership period, given the discrepancy in purchase costs. This echoes our own five-year findings, though with tax incentives and lower service costs included, the difference is much lower.

The EIA expects that the cost of electric vehicles will only fall with battery prices, and the report does envision that happening over the next few years.

By 2015, the average 100-mile electric car should cost $33,000 (before incentives), and sell in numbers of around 6,200 per year. Given that the Renault-Nissan alliance expects to be selling half a million electric vehicles by 2015, the EIA's figures look particularly low. Even more so next to Elon Musk's optimistic predictions...

Should the average cost of a 100-mile EV fall to around $25,000--which it doesn't see happening for another twenty years or more--it suggests that sales could grow to 1.3 million per year.

That time period sounds a little pessimistic to us, though the pricing figures do consider an incremental rise in cost of buying vehicles, due to inflation. The report doesn't seem to take into account the greater rise in price of regular internal combustion vehicles due to tighter 2025 emissions legislation.

$25,000 electric cars not that far away...

Pre-incentives, the 2012 Mitsubishi i is already less than $30,000, and the 100-mile 2012 Nissan Leaf is $35,000. We'd be surprised if, with many more electric cars due on the market in the next few years, the average cost has only decreased to $33,000.

The EIA's report, which you can find here, also suggests that 100-mile EVs will still be the norm by 2035, as though pricing will have come down, electric cars with longer range--200 miles, for example--will still be more expensive than mass market consumers are willing to pay.

In addition to pricing, the report suggests charging times, the lack of a widespread public charging infrastructure, and the general increase in economy of regular gasoline vehicles, are also factors contributing to low electric vehicle sales.

Naturally, many of these factors aren't so much of an issue for the early adopters of electric cars, who prioritize technology and green credentials, or may have a longer-term view than just five years.

If you've not bought an electric car yet, what major factor is stopping you? Price, range, or something else?

Leave us your thoughts in the comments section below.

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Comments (30)

johnny mars Posted: 7/10/2012 8:39am PDT

1. Price
2. Range Anxiety
3. Lack of electric infrastructure

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George Parrott Posted: 7/10/2012 9:28am PDT

As our first comment suggests, it is a COMBINATION of factors that make the current crop of EVs less than attractive. Check out this summary of how these factors may combine to produce a "value assessment" for EVs vs conventional ICE technology.

http://solarchargeddriving.com/news/evsphevs/1019-why-evs-arent-more-popular-in-the-us.html

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EV Enthusiast Posted: 7/10/2012 11:32pm PDT

it is not a combination of factors. it is price, price, price (yes meant to mimic the real estate quote of location, location, location).

not 1 person in 100 would buy an ice today, if ev costs were the same, with the same range.

evs have way less maintenance, way less parts to maintain, etc. etc.

for those drove far enough often enough that it was worth it for them to own a "long-distance car", they would purchase a used ice for that.

there would always be a few exceptions, but not many.

if at any time the bigwigs want to basically get rid of new ice cars, the only thing that needs adjusting is the price sticker.

as more and more evs hit the road, such that the average joe can talk to another average joe who owns an ev -

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EV Enthusiast Posted: 7/10/2012 11:33pm PDT

the only advertising that is needed.

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EV Enthusiast Posted: 7/10/2012 11:36pm PDT

note - when i said "same range" i was referring to having the same range as today's ev, not the same range of an ice.

range has never been an issue. it is just something that journalists like to write about, and non-ev owners like to whine about.

it is funny how actual ev owners all seem to adjust their habits to their new tools. gosh, i betcha none of us ever do that !!!!

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Greg Sheldon Posted: 7/11/2012 4:50pm PDT

That's why there are stories starting to surface about EV owners trading in their cars for Volts. It was ALL about range anxiety

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Don Davidson III Posted: 7/10/2012 10:19am PDT

Other than the cost of the battery pack, what makes EV's more expensive than ICE vehicles. when you take into consideration there is minimal if not zero maintenance associated with EV's compared to routine oil changes/mufflers & exhaust parts, the literally thousands of components to make an ICE that do not exist with EV's. All there are in an EV are 3 components: The battery, the controller that feeds electricity from the battery to the third part: the motor(s). As a (new) product on the market, EV's will be initially expensive. If the trend follows flat screen TV's which initially cost thousands of dollars and can now be had for less than $500 The cost of an EV will drop significantly to the point where eventually an ICE will cost more

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Danny Santiago Posted: 7/10/2012 3:35pm PDT

Don, I totally agree. I've been saying the same for some time. In addition, if EVs like the Leaf or Mitsubishi i had sexual, sportier looks, they would attract many more buyers.

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john reed Posted: 7/10/2012 12:17pm PDT

I WON'T BUY AN ELECTRIC CAR AS LONG AS THE GOV WILL ONLY GIVE THE INCENTIVES TO THE RICH! [BIG SURPRISE!!] IF YOU ARE RETIRED AND HAVE LITTLE OR NO INCOME-- YOU GET NO INCENTIVE.

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John Briggs Posted: 7/10/2012 12:39pm PDT

WHERE IS THAT DANG CAPS LOCK BUTTON...

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Frank Smith III Posted: 7/10/2012 1:39pm PDT

Retired folks have trouble reading the fine print so they capitalize everything. My Dad does the same thing! :)

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Xiaolong Li Posted: 7/10/2012 2:26pm PDT

retired people with little income usually don't drive much either...

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johnny mars Posted: 12/30/2012 9:47pm PST

Not always true. Since retiring I'm driving more miles as I have more time to go places and do things, like take mini vacations. And yes, I really can't take advantage of a tax credit as I have little income. Retired folks just don't stay home and sit in their rockers! BTW, I also ride a motorcycle and a bicycle frequently.

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Chris Teague Posted: 7/10/2012 2:56pm PDT

John, your caps lock key appears to be broken. Also, the Obama administration has proposed making the $7500 federal rebate a time-of-purchase credit instead. It's been blocked by the Republicans because it's 1. Proposed by Obama, 2. Related to electric cars

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Xiaolong Li Posted: 7/10/2012 2:31pm PDT

Price misconception or terrible math skills by most people..
How come everyone (including the writer) always ask about when EV can pay back the saving? Do they ask that for luxury car? Do they ask that for SUVs? Do they ask that for sports convertible?
EVs need a new marketing make over... The "green" campaign have failed at marketing...
Apple never advertise how long their battery last or how much money it will save you or how much cheaper it is, only their beaten competitors do...
EV has a better "operating experience"!

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Jim Royston Posted: 7/10/2012 7:25pm PDT

I think you are dead on, Xiaolong. Who really computes payback for a car? They are money pits, really. I don't plan on my Leaf hitting a payback threshold. I just know the operating costs are low, maintenance time costs should be low and driving comfort and convenience is high. I'm not burning anything locally, either. My power provider's emissions are a bunch lower than cold starting my Prius for a 3 mile average trip, too.

I think what is hanging up sales of the Leaf is that the risk takers have already bought one. The second tier buyer has a year or two to wait and see if the car develops any major issues. I don't think price is the issue.

Congratulations on the purchase of your Volt. They are damn nice cars.

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Richard Camp Posted: 7/10/2012 11:42pm PDT

Jim, you hit the nail on the head, at least for my wife & I. We're both interested in purchasing an EV, but two things are holding us up. You mentioned the first - we wish to see if any initial problems come up before jumping in. Secondly, most of the car manufacturers are just playing games, with their "test" or "compliance" cars. I would really like a Toyota Rav4 EV, but it's unlikely I will get the chance.

I also believe the federal rebate should be denied to manufacturers like Honda, who only provide their EV as a lease. If it's not for sale to the public, they shouldn't get incentives.

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Xiaolong Li Posted: 7/15/2012 1:28am PDT

Thanks. I love the Leaf. But since it is 1st generation, there are few small bugs to work out. I know personally plenty people who are on the side line to watch and see if they are improved. (Things such as battery warranty, range indicator, faster charger..etc). Same can be said for the Volt. I know plenty co-workers of mine who were really impressed with the car but wanted to make sure the technology is "mature" enough for them to take the leap. They worry that typical dealership won't be able to handle the service and support since most the auto mechanics aren't experienced in dealing with EVs or Complex EREVs such as Volt. Those concerns are valid.

I told them that they should lease one if they are worried about it.. :)

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Antony Ingram Posted: 7/11/2012 1:01am PDT

I agree Xiaolong - the actual experience of driving an EV is what it should be sold on.

However, it's a disruptive technology and one that very few consumers are used to. They've been driving ICEs for years, and now see this other option - this much more expensive option. By writing about "payback", I'm simply reflecting the questions asked by people new to EV technology, who might want some indication of how long it'll take for them to start saving enough to make back the thousands extra they paid at purchase.

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Xiaolong Li Posted: 7/15/2012 1:23am PDT

Well, the fact is that it is NOT more expensive option. A typical $20K econ box are usually louder and rougher when driven. If you take a lot of short trips, their MPG gets to be really horrible b/c ICE is never really warmed up to reach optimal conditions. EVs don't have that problem. They are ready to go when you are. And charging at home is a big plus. B/c most people can't fill up gas at home (except for CNG cars). You don't have to run out to fill up gas just b/c you are getting empty...

Those should be selling points...

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Antony Ingram Posted: 7/11/2012 1:03am PDT

The reason people don't ask about payback for a luxury car/SUV/convertible or anything else is because they may not be buying those cars (in fact, I think I'm probably right in saving they AREN'T buying those cars) in order to specifically save money on gas.

Hence, payback is irrelevant for those cars, but quite relevant for EVs.

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Xiaolong Li Posted: 7/15/2012 1:25am PDT

I didn't think how long my Volt would pay it back for me. I thought that Volt cost me about $32k. A nice loaded Acura TSX would cost about the same. Volt was quieter and really cool. The gas saving was only a "bonus" that TSX can NEVER do.

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Frank Smith III Posted: 7/10/2012 2:38pm PDT

These surveys are useless. If I was asked why I don't own a Harley Davidson the survey would probably interpret my answers as lack of features, Price, Safety. The truth is I like AC, Heat and rain protection and my wife won't let me own one. But I do not hold that against the people that want to have one. I love my Electric car. It fit my needs fine and it saves me money in GAS and maintenance.

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Frank Smith III Posted: 7/10/2012 3:12pm PDT

Germany and other European countries are already ahead of the US in electric cars and renewable energy. Soon China will be as well. http://gigaom.com/cleantech/the-future-for-electric-car-startup-tech-is-in-china.

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Xiaolong Li Posted: 7/10/2012 3:40pm PDT

Well, China is overblown in terms of EV tech. E-bikes, YES. They are ahead. But EVs, NO. Most Chinese household can't even afford a high power charger b/c the lacking in electricity capacity.

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Chris O Posted: 7/10/2012 5:03pm PDT

Of course if over the next 5 years time the price of a Leaf really converges to that of a VW Golf like Nissan's Carlos Ghosn more or less predicts this is just another report about the rate of EV adoption that we will one day look back on and say: what were those "experts" thinking.

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Jim Royston Posted: 7/11/2012 6:30am PDT

Funny thing is that I had a 2010 Golf TDI that was fully loaded and sold for $28,500. My 2011 Leaf SV will be around $27,000 after I get my tax credit.

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Jim Royston Posted: 7/11/2012 6:37am PDT

When I bought my Leaf I bought it because it was fully electric and made by a reputable manufacturer. I never would have guessed that the car would use so little electricity. I try to tell people that it is about three times cheaper to run than my Golf TDI or our 2005 Prius but for most people I tell it doesn't compute. The fact that I cannot leave town with it is all they think of.

I've spent $110 in electricity to go 4000 miles. Its so dang cheap to run. I have two other cars available to me to go out of town on the rare occasions that I do.

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Jeff Sponsler Posted: 7/15/2012 7:53pm PDT

I have a FISKER KARMA and I love the machine. The car feels like a NASA project with respect the technology under the hood. I have over 1000 miles and have used no gasoline. I do not expect to recoup my expenses in gasoline savings. I am very happy that my energy dollars are going to my local electric company and not to a giant multinational oil company (or a country where women cannot drive a car legally, or the rape of Alberta). I also am pleasantly amused by the number of people who snap photos of my car (every day). I anxiously await an EV/SUV and will absolutely buy one of these too. Gasoline is way underpriced given the environmental and political costs.
Thanks for listening.

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johnny mars Posted: 12/30/2012 9:54pm PST

Concerned about ROI and TCO? Check out this report on the true cost of ownership of a Chevy Volt: http://www.edmunds.com/chevrolet/volt/2012/tco.html?style=101388714 It's right down there with a Honda Civic ICE and below a Cruze Eco and a Smart 4-2!

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