I always wondered why EV’s were so much more expensive that Gas cars, so I decided to find out why, and this is what I found out.
Why are electric cars more expensive to buy than gas cars? It is estimated than on average the battery makes up to 40% of the cost of an EV compared to a gas car. This is because of the cost of the Lithium, cobalt, and aluminum but these costs are coming down and here is why.
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Take a look at any EV Model and try to guess what’s the most expensive part to manufacture, go ahead we’ll wait. Okay, if it’s not obvious because you can’t see it without tearing apart a car.
Investment bankers UBS ran an analysis of such a teardown and found that the battery makes up to 40% of the manufacturing costs of the average EV. The battery has been one of the greatest challenges in the goal to make a vehicle that’s affordable to most people, yet still profitable.
The ticket price for a Tesla Model 3, for example, is currently about $42,900, while the average new car in America is selling at around $32,000. In February Mr. musk tweeted that the Model 3 is down to just below $35,000 but only if you include $8,000 in gas savings and a tax credit that’s set to expire on July 1st.
The forty-two thousand nine hundred dollar ticket still puts the Model 3 outside of reach for most consumers, so we’re going to take a look at what makes the batteries, in general, so expensive.
When I see an EV I don’t see a car, I see a battery pack driving around disguised as a car. J Whittaker of Carnegie Mellon University studies the battery cells produced by Panasonic, Tesla’s supplier.
Certainly, the first or second most expensive thing in any of these vehicles is the battery pack, and so they are acutely interested in shaving off every penny they can from the cost of that pack because obviously, the vehicle market is very competitive and they are competing with internal combustion engine cars.
He says the amount of charge a battery holds can make a big difference in the batteries cost. The lower end of the Model 3 can hold 50-kilowatt hours of charge, that’s good for 220 miles of driving doing that takes 2976 small batteries, the Panasonic 2170.
It is good reason to believe that Tesla has found that sweet spot with this variation because I think they’re one of the earlier adopters or maybe the only adopter of this particular size.
It remains the most energy-dense battery suitable for electric vehicles, its namesake 21 and 70 stands for the diameter and height of the battery which is bigger and bulkier than the predecessor found in the Model S.
The main thing you want to do if you want to optimize the cost of a lithium-ion battery cell, is you want to add the thickest electrodes you can have in any of them, so you’re making fewer cells with more energy. This will play out to a better cost proposition at the other day.
The nuance and materials matter, Tesla’s batteries rely on a mixture of lithium, nickel, cobalt, aluminum, and oxide. The biggest thing driving the cost was the cobalt, so Tesla and Panasonic reduced their reliance on the element, their new battery uses more silicon instead.
Analyst sandy Munroe who tore down Model 3’s touted its battery management system saying that Tesla is far ahead of the competition. Over the last decade, batteries were projected to come in at pretty expensive rates, as much as fifteen hundred dollars per kilowatt-hour. In a vehicle with a similar range to the Model 3 that could translate to a $75,000 battery.
When contacted, Tesla wouldn’t share details on its cost for the Model 3 batteries but it’s clear that the company has consistently entered markets well under projected rates. The red dots on this chart represent their entries on the EV market and a UBS estimate on Tesla’s Model 3 batteries comes in at 111 dollars per kilowatt-hour.
That’s 20 percent cheaper than the nearest competitor, but so far it hasn’t been enough to hit the thirty-five thousand dollar mark without tax credits. So the company has looked for other ways to optimize battery costs, like scaling production.
In 2015 the automaker announced a joint venture gigafactory with Panasonic. Tesla’s website shows that the factory is producing up to 20-gigawatt hours of new capacity each year, which includes manufacturing for other products but there’s plenty of battery storage for cars happening there.
Whitaker says that many batteries per year maxes out their savings from a high scale of production. What their analysis shows is that if you get much above 600-megawatt hours a year to one gigawatt-hour a year of lithium-ion battery production.
In a factory adding more things in that factory, adding more units or increasing the throughput doesn’t help you with cost anymore.
However, the corollary is that if you centralize a huge amount of production of one thing in one location, your supply chain is simplified, your logistics are simplified, your manpower distribution is simplified, there’s a lot of other overhead or exogenous things that can be significant in the overall rundown the costs.
So, for now, Tesla and other EV manufacturers will have to find some other way to get to a true price that has wide appeal in the States. Tax credits or production line tweaks can help, but without a scientific breakthrough, there are limited ways to make big savings in the battery.
For consumers that means another generation of research is due before EV’s can compete on price with their gasoline-fueled alternatives.
I have been using electric cars for several years using and trying out different brands that I have made episodes about in this channel. Now I’m driving a Tesla Model 3 but why is the car so expensive?
Yes, especially Tesla is expensive, but the main factor why an electric car is more expensive than an equivalent combustion engine car is the cost of the battery, and if you buy from abroad, transport, duty, tax and sometimes currency conversion rates is making the car even more expensive.
But hopefully, we’ll see a price drop in the future when even more electric cars come to the market and the competition gets stronger.
The supply of batteries is still an issue that is putting a restraint on the market, also to remember is that there is a used market for electric cars that is growing for every new vehicle brought to the market.
So as you see not all budgets may mean is not fitting a brand new car but go out there and see if there is a used electric car that might fit your budget.
But returning to new cars the biggest problem I think is that people, when they go and hunt for a new car, is comparing the prices between a traditional combustion engine car and an electric car and see that the electric car is more expensive
But this is like comparing apples and pears because if you look over the long term like five years or longer, then the overall cost most of the time is in favor of the electric car.
It depends on how much you drive a car, especially if you drive a lot. But overall an electric car is most of the time in most countries the better option.
Of course, you have to come up with the money first but I encourage you to go home and do your homework and calculate what option is the best for your transport both economically and also the environment.
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