An unfortunate fact about switching to an all-electric car, is that they’re typically more expensive to buy or lease than an internal combustion (ICE) equivalent.
However, making the switch to an electric car is often far more affordable than most people think. Especially if you utilise a salary sacrifice scheme. This slashes the monthly cost down to a far more attractive price than purchasing outright or a traditional lease deal. Even with the electric premium and a rise in energy cost – electric cars are still cheaper to run than a traditional ICE vehicle.
Lose money hand-over-fist in the hopes of starting an all-electric revolution, or push the cost of their vehicles up into an unattractive price bracket.
Why are electric cars more expensive?
The most concerning claim to consumers was that battery packs deteriorated quickly. Coupled with a higher overall cost than petrol or diesel cars and the prospect of an electric car was far less attractive than it is now.
We’ve identified three key factors:
- Batteries are very expensive
- Demand still far outstrips supply
- The leasing industry is still skittish about residual values for electric cars
Below we’ll have a look at the large upfront cost of the battery within an electric car, how supply chain issues are pushing prices up and why leasing companies still charge such a premium on electric cars.
A battery for an electric car costs £5,600 on average
Batteries remain the chief reason that electric cars demand such a cost-premium. Even though the first iteration of an electric vehicle was created all the way back in the 1830s, the development of lithium-ion batteries has taken rather a long time to catch up.
To begin with, the battery packs used by electric cars actually consist of hundreds of cells. To produce such a large lithium-ion pack requires lots of raw materials – some of which are precious metals and rare elements; cobalt, nickel and lithium to name a few.
Extracting cobalt and nickel from mines is a costly process, with lithium refinement requiring a large amount of water.
