A sticking point for buying electric cars has always been that they are typically more expensive than equivalent gasoline-powered cars. But increasing competition, government incentives, and falling prices for lithium and other battery materials is changing the equation. In fact, the tipping point when electric cars are as cheap or even cheaper than internal combustion cars is likely to happen this year for many cars and, in fact, has already happened for some.
Battery production is ramping up for Tesla, General Motors, Ford, and others, creating cost savings from mass production. Companies manufacturing batteries in the United States are receiving government subsidies as part of a drive to establish a domestic supply chain and reduce dependence on China. Before anyone cries foul, it should be noted that globally, oil companies received a trillion dollars in subsidies last year. The Inflation Reduction Act is making it cheaper for automakers to build electric cars (provided they do it in the United States using US materials) and cheaper for consumers to buy them because of tax credits.
Multiple companies have lowered the price of their electric vehicles in recent months, including both the Tesla Model 3 and Model Y, which are the best-selling electric cars in the United States. GM’s electric Equinox crossover will start at about $30,000, which is still about $3,400 more than the gas-powered version. But once the electric vehicle tax credit is figured in, it will actually be cheaper.
Electric cars are already cheaper to own and operate because of the much lower cost of powering with electricity instead of gas as well as the greatly reduced maintenance costs for the vehicles. Once the purchase price of these cars is less than that of gas-powered cars, the economics becomes a no-brainer.
Photo, posted May 11, 2021, courtesy of Chris Yarzab via Flickr.