The nice thing about new technology is that, eventually, it drops in price. A flatscreen HDTV used to cost thousands, now there is one in most homes in America. Laptops once cost as much as a compact car; now you can get one for a week’s worth of minimum wage work. The same thing seems to be happening to electric and hybrid cars. The Tesla Model S and Chevy Volt are expecting significant price cuts in the near future, and cars like the Nissan Leaf and Smart ForTwo Electric Drive have already shaved thousands from their MSRP.
Let us start with Tesla. The Tesla Roadster and Model S are the elite of the electric car world – and you pay for them with the Roadster fetching over $100 grand and the Model S sitting at about $62,500 grand after tax credits. Now, visionary CEO Elon Musk is aiming to bring a new Tesla to the masses in three to five years priced near $35,000. And do not forget the federal and state breaks which will knock that price down a little bit more.
While Tesla is slowing lowering the price of their electric vehicles ( EVs), Nissan has already dropped the sticker price of the Leaf by 18% for a new price of $28,000. Meanwhile General Motors has announced that the next generation Volts will be 7,000 to $10,000 cheaper. The Volt currently sits around $39,000, with much of that cost tied up in the battery. If the chart above provided by Deutsche Bank proves true, battery prices could plummet in the next decade.
So what is going on here? Well, with technological advancement comes price reeducation, which we have been waiting years for. Also competition plays a major role. The EV and hybrid market has hit the mainstream, but consumers are wary of spending luxury-car-money on compact EVs. This is why the Tesla Model S has done so well; sure, it costs a lot of money, but it is a genuine luxury car as well.
But this leaves the lower end of the market wide-open for exploitation, and an EV price war of sorts has set in. The consumer gets a playing field of the gas powered cars competing with the EVs and hybrids. Now that prices for EVs are coming down, and it looks like state and federal breaks are here to stay, at least for now, EVs could soon start selling in numbers that rival many gas-powered models. Soon they might not even need tax breaks to be price competitive. That means that gas powered cars will have to step up their miles per gallon range (and they have) and maintain a reasonable price. That is, so long as battery prices keep falling.
Either way the consumer wins.
Source: The Dailye Beast
Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor’s Degree in Government and International Relations from Clark University and a Master’s Degree in Political Science from Northeastern University. Being an Eagle Scout, Andrew has a passion for all things environmental. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail. You can follow Andrew on Twitter @AndrewMeggison