Electric cars are gaining popularity rapidly, from Detroit and London to Berlin and Beijing. In fact, the US, Europe, and China dominate half of the electric cars market with Tesla, Nissan and China’s BYD supplying these vehicles.
There are plans to ship electric vehicles globally in the next several years. But the industry is far from taking over despite some remarkable progress.
Reduced Car Prices
For a long time, price was the primary barrier in getting people to purchase electric cars. It wasn’t unusual for an electric sedan to cost above $80,000 and SUVs to cost as much as $200,000 five years ago.
Luckily, those days are gone and some electric SUVs and sedans cost as low as $22,000. The 2018 Nissan Leaf, in particular, costs $22,490 but the 2020 model goes for $31,600.
On the other end, the Tesla Model S starts at $67,000 for the 2018 car and $99,990 for the 2020 version. Most manufacturers price their latest models higher than older cars and that’s alright.
Still, there are plenty of affordable electric cars today than five years ago. And that means more people can afford to own them.
Incentivizing Electric Cars
Countries on the front line of replacing gasoline vehicles with electric models are getting creative with incentives. In Norway, purchasing an electric car comes with exclusive tax exemptions. And as a result, 46% of cars in the Nordic country are electric.
In Singapore, the government provides free charging areas for electric car drivers. The city of Shenzhen, on the other end, has been brokering deals left, right and center to equip itself with fleets of electric buses.
And it’s not cars and buses governments are incentivizing. Thailand has been helping Tuk-tuk, rickshaw and motorcycle drivers transition from fuel to electric cars by investing in proper manufacturing infrastructure.
Depending on how governments continue to motivate manufacturers and buyers, electric cars could take over sooner than expected. The industry could experience the same shift as the casino sector.
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Enticing Maintenance Costs
Charging an electric car costs as little as $300 per year for the most power-efficient models. By comparison, it costs an average of $1000 to fuel a gasoline car each year for an equally efficient vehicle. Of course, that applies if all factors remain standard.
Besides fuel, EVs require regular car maintenance like their gasoline counterparts. For starters, you need to rotate tires regularly. And because of their large batteries, you might have to do it more regularly than someone who uses a fuel car.
You won’t escape brake fluid service although many EVs depend on regenerative braking to save discs and pads. What’s more, you’ll need to invest in coolant maintenance. Fortunately, most cars require the service after 50,000 miles (roughly 3-4 years).
Falling Battery Prices
Although electric cars are now more affordable than ever before, their batteries aren’t cheap. And that’s a major deal-breaker for a lot of people. Several years ago, the Nissan Leaf’s battery cost $15,000, about half the car’s price.
Fast forward to 2020 and the LEAF’s battery costs as low as $5000 for older models and $10,000 for newer models. GM is also working on reducing prices for its electric models from over $200 to $100 per kilowatt-hour.
Cheaper batteries will mean more affordable maintenance for electric cars. And as a result, more people will be interested in them. As things stand, though, it will take a few years before the more expensive EVs like Tesla drop their prices to reasonable prices.
More Mileage per kWh
Electric car manufacturers hope tapping on technology to develop more energy-efficient vehicles will revolutionize the car industry. GM engineers, for example, are building batteries that could power a car for 600 miles before there’s a need for a recharge.
To provide some context, most electric cars require charging after 250 to 400 miles. As such, doubling the mileage could be a true game-changer. It would also be a significant difference compared to the mileage provided by gasoline cars.
In the US, the average SUV has a fuel economy of 25 miles per gallon. That means a car with a 15-gallon tank will do 375 miles at best.
There’s one problem, though. The cost of recharging would have to be lower than gas prices to convince people EVs are worth it.
Presently, a gallon of gas costs as little as $2 in some US states. That translates to $30 to fill up a 15-gallon tank. By comparison, charging a Tesla costs $15 for a model with a performance of 370 miles.
A Few Challenges
Although all signs show electric cars will continue to mushroom worldwide, the industry is not without challenges. A few notable manufacturers like Harley-Davidson and UK’s Dyson found these challenges too daunting to invest.
As a result, the American motorcycle brand no longer has an interest in building its first fully electric model. Dyson exited the sector last October in the belief that it doesn’t see electric cars commercially viable.
So, what’s the main problem?
Building a working electric car is super expensive, even for established brands like BMW and Volvo. And when companies create these cars, they can’t find a way to make them affordable for the working middle class.
- Technological Difficulties
Harley-Davidson’s primary reason for halting its electric motorcycle didn’t come from a lack of funding. Instead, the company couldn’t find a way to fix a problem with the charging system of its bikes.
- Low Demand
With less than 250,000 electric cars sold in the US last year, it will take a while before there’s a substantial market for these cars. GM projects sales of three million cars per year by 2030, a figure Tesla hopes will become a reality sooner rather than later.