Electric vehicles have always tended to be slightly more expensive on average when compared to traditional gasoline powered cars. This was to be expected. Electric vehicles are still somewhat of a novelty.

Whenever new consumer technologies are introduced, it is often the case that they are treated as premium or exclusive items for a period of time before they become more affordable for the average consumer. However, recent trends indicate that inflation has contributed to an even greater increase in the price of EVs.

Specifically, researchers with Edmunds.com have determined that the average cost of an EV is currently $61,000. Comparatively, the average cost of a car in general is $46,000. These findings indicate that for the foreseeable future EVs will remain luxury items that only a few American consumers can afford.

Consider the fact that statistically, more than half of Americans can’t afford to purchase any type of new car. Given that EVs typically cost more than gasoline-powered cars, it is reasonable to conclude that many Americans will be stuck relying on gasoline to fuel their vehicles for years to come, even if they would prefer to make the more environmentally-friendly switch to an EV. According to Charlie Chesbrough, a senior economist with Cox Automotive, “It’s clearly a product for the upper crust. It’s going to be a long time before electric vehicles are the majority of cars on the road.”

Various factors have contributed to the high cost of EVs. One particularly significant factor is the cost of the raw materials necessary to manufacture these vehicles. In fact, Ford CFO John Lawler has stated that the cost of certain materials has risen so high that the company’s battery-powered vehicles are simply no longer profitable. 

Lawler has also implied that inflation may be negatively affecting consumers’ ability to pay for new vehicles. He specifically stated that rising inflation and interest rates have correlated with an increase in auto loan delinquencies.

It is worth noting that this trend has not necessarily discouraged all potential buyers from seeking out EVs. Many automakers have found that those who can afford such vehicles remain willing to purchase them in fairly consistent numbers.

The problem, however, is that one of the theoretical benefits EVs are meant to offer is widespread reduction in carbon emissions. If EVs remain luxury items, available only to those with relatively high incomes, it is unlikely that Americans will buy them in large enough numbers to yield any significant environmental benefits.

None of this is meant to suggest that this is a problem without a solution. Historically, new technologies and innovations in consumer products have often been prohibitively expensive during the early years of availability. Personal computers offer an example worthy of study for those who have concerns about whether EVs will ever become more affordable.

For instance, the Macintosh 128K (the original Apple Mac computer) was priced at approximately $2,500 upon its release in 1984. Adjusted for inflation, that means it would cost a little over $7,000 in 2022. Yet, the starting price for a 13-inch Macbook Pro laptop today is a mere $1,299. Despite decades of inflation, the cost of this type of product has dropped substantially instead of rising.

It is true that electric vehicles and personal computers are not the same thing. However, the history of devices such as personal computers and other such previously “high-end” consumer products can theoretically offer us some perspective on the possible trajectory of EV pricing in the coming years. It is impossible to say with any degree of absolute certainty precisely how automakers and other relevant parties will address this particular issue. We will have to wait and see what steps they may take to ensure that their EVs ultimately become more affordable.

That said, It can be assumed that automakers seeking to reach more customers with their EVs will prioritize developing manufacturing solutions that reduce the cost of EV production. Additionally, both state and federal government agencies may increasingly offer financial incentives to those considering purchasing EVs. Although they have already done so to some extent, as the environmental benefits these vehicles can offer become more apparent, government agencies may place even greater emphasis on encouraging consumers to make the switch to electric vehicles.

These predictions may not necessarily influence a consumer’s purchasing decisions right now. As it stands, EVs are still luxury items that not everyone can justify buying. However, there is reason to hope this will change sometime in the future.  

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