Oct 09: EV's are currently very expensive and its stopping a lot of potential
customers from buying into the new technology. Hybrids are getting cheaper
all the time but electric vehicles are yet to follow suit. Manufacturers
are not yet able to produce cheap EV's. Mitsubishi's iMiEV car went on sale
in July this year and the price was a hefty US$50,000, around twice the
cost of a Prius. Other electric car makers are having the same cost problem.
Subaru will release the Stella electric vehicle this year, but the cost
will be a disappointing US$60,000.
The car industry says that EV prices will fall as production steps up. Mitsubishi
say we should see the cost of their electric cars halve when they get some
economy of scale. This may be true, but who wants to buy their EV now when
the price is high? Most customers will wait for the expected fall in price
before making a purchase. If a car maker could lower its electric car price
now, and take a financial loss for a few years, they could secure a large
share of the market and get ahead of the competition. In a few years they'd
have some economy of scale and could start turning in a profit. However
there isn't enough spare cash in the car industry for a manufacturer to
do this. They just can't take this kind of risk, even if the reward is big.
I'm afraid we're just going to have to wait for more early adopters in order
to get things moving. How long will it be before we see significant price
drops? I don't expect any cheap EV's for the next three years. When they
do start to drop in price we should see very large price drops in the same
way that electrical goods have historically dropped.