What makes Electric Vehicles so expensive?

Many factors contribute to the high cost of electric vehicles (EVs), but the primary driver is how expensive their batteries are. Batteries make up roughly one-third of the cost of an electric vehicle, making them the most significant price factor. At the same time, some EV manufacturers are setting ambitious goals to produce $ 25,000 electric vehicles by 2023. This will mean having to find ways to reduce production costs without compromising on the safety side. If not manufactured properly, malfunctions in batteries can pose serious risks, including fire hazards, among other risks.

For more on battery safety standards, see our guide on UL 9540A Thermal Propagation Testing.

Why are batteries so expensive?

High costs are primarily due to the expensive materials used in battery production. For example, the cathode (the most expensive component in an EV’s battery) relies on materials like cobalt, nickel, lithium, and manganese to store and release energy. The mining process to extract and convert these materials into compounds requires complex mining and refining processes. This mining process is a costly one, which in turn, increases the cost of the final product. In addition to this, before being placed on the market, batteries must undergo strict compliance testing, including safety, environmental, and durability assessments, among others, which further increase costs.

For more information on battery testing requirements, please refer to our article, “The Crucial Role of Testing Lithium Batteries.”

How can the cost of batteries be reduced?

One of the main areas that manufacturers will examine to reduce battery costs is the substitution of high-cost materials with less expensive ones. For example, alternatives to cobalt, such as nickel and lithium-iron-phosphate (LFP) cells, are among those being considered. Advances in battery chemistry and economies of scale are also helping reduce prices. Another key factor is streamlining certification processes and optimizing compliance.

So… is it worth it to “Go Electrical”?

Absolutely. While EVs currently have a higher upfront cost, the long-term savings are substantial. By 2023-2026, prices are expected to drop significantly, with $25K EVs becoming a reality. Meaning consumers might be able to purchase an electric vehicle for just $25K, about $15K less than some of the least expensive models currently available on the market today. Additionally, at the rate that the technology is advancing, we will soon be able to see performance upgrades that will increase a car’s range by 50% before 2026, as some battery makers state. EVs might be more expensive to start with, but between the savings on gasoline, tax breaks, and utility rebates to offset the cost, going electric is simply a no-brainer! For insights on EV charging infrastructure, check out our guide on EV Charging Systems.

For more information on Testing & Certification for EV Batteries, please contact LabTest Certification at info@labtestcert.com.

Stringer, D. & Park, K. – Bloomberg (2021, September 21). Why an electric car battery is so expensive. The Post-Standard & Syracuse.com. Edition. https://www.bloomberg.com/news/articles/2020-10-22/why-building-an-electric-car-is-so-expensive-for-now-quicktake