Editor’s note: We truly wanted this story to show electric cars are worth the investment. We like the thought of electric vehicles running around town as much as the next guy, but it’s tough to paint a rosy picture when the only colour in your palette is green. $$$
With its smooth lines and sleek design, it isn’t hard to argue the recently announced Tesla Model S is one of the nicest looking electric vehicles to hit the North American market.
Like a wolf in an Armani suit, the Model S boasts styling and performance that rival luxurious Lexus and Infinti—with a price tag to match.
Hitting Canadian showroom floors in the $64,000 to $86,000 range, car buyers won’t be choking on the sedan’s fumes, but may need resuscitation with the MSRP staring them in the faces.
And therein lies the biggest issue facing environmentally conscious consumers: the cars simply cost a heck of a lot.
Even on the “cheap” end of the spectrum, electric or plug-in electric vehicles carry hefty price tags.
A fully electric commuter Ford Focus five-door carries a list price of more than $37,000.
Compare that to the internal combustion Focus hatchback that starts around $18,500 and it’s easy to see why more drivers aren’t trading in their gas guzzlers and joining the green shift.
One of the biggest factors driving such high prices is the technology that powers electric vehicles.
As noted by ARC Advisory Group analyst Stefan Miksch, lithium-ion (Li-ion) batteries used in electric vehicles aren’t cheap.
In today’s market, Li-ion batteries go for $500-600/kilowatt-hour (kWh), according to Miksch.
That puts the cost of the battery alone in the Model S at around $20,000 to $51,000, depending on battery pack size.
Comparable in size, the Camry Hybrid LE equipped with a 2.5-litre four-cylinder engine averages 41 miles per gallon (mpg) and has an annual fuel cost of $1,350, according to the U.S. Department of Energy (DOE).
Those numbers, according to the website, are based on 15,000 annual miles, with highway and city driving split 45 and 55 per cent, respectively.
For those metric-minded folks, that works out to be around 5.7-litres/100-kilometres, travelling a little more than 24,000-kilometres in a year.
The Model S, according to the DOE, gets an mpg equivalent of 89 combined, and has an annual fuel cost of $700.
Based on one gallon of gasoline being the equivalent of 33.7-kWh, the Tesla reigns supreme in consumption, with a cost of $1.14 to drive 25-miles compared to the Camry Hybrid’s $2.27.
Where the Toyota jumps back in front, though, is purchase price and lifetime cost.
With an MSRP around $27,000, the base model Camry Hybrid comes in at $37,000 less than the Model S base price of $64,000.
Based on the DOE’s annual fuel cost of $1,350, it would take the Camry Hybrid more than 27 years of driving 24,000-kilometres each year to even hit the Tesla’s base price.
Again, based on the department’s annual fuel cost of $700, 27 years of driving the Model S would nudge the lifetime cost up almost $19,000 to more than $83,000.
Stats don’t lie
The apprehension to take the financial leap of faith and buy an electric vehicle is evidenced by the lackluster sales numbers.
In April, the Globe and Mail quoted data provided by auto analyst Dennis DesRosiers of DesRosiers Automotive Consultants that showed miserable 2011 electric vehicle sales in Canada.
Despite the hype, Chevrolet sold a mere 275 Volts last year, with the Nissan Leaf and Mitsubishi iMiEV left in the dust, with sales of 170 and 23 units, respectively.
That’s 468 electric vehicles in a Canadian market that saw sales of 1,585,519, according to DesRosiers.
The U.S. didn’t fare much better in 2011, with the Volt, Leaf and iMiEV totaling sales of 17,398 units out of a total new vehicle market of 12,731,537.
Even with government subsidies for those green drivers—payed for by taxpayers—electric vehicles have yet to electrify the market the way it was hoped.
As ARC’s Miksch claims, electric vehicles won’t be consumed by the masses until battery prices drop.
Batteries in the $250/kWh range would be a good target.
In theory, that shiny new Tesla Model S would suddenly look much more attractive to drivers if the sticker price dropped in unison with battery prices.
Even the top-end 85-kWh Model S—with a current list price of $85,900—would drop to a more reasonable price, with a battery pack cost around $21,250.
Doing the math, cheaper batteries would put the long-range Model S in the $56,000 MSRP range, a price that’s a little easier to swallow.
The 40-kWh base-model, going by the same theory, would likely drop to about $40,000.
Despite the allure of being friendly to the environment, electric vehicles won’t charge the market until they become friendlier to the pocketbook.