Electric and hybrid-electric vehicles (EVs) are becoming increasingly popular around the world.
You’d be hard-pressed to find an urban area that doesn’t have one or two electric scooters whizzing around, or a fuel station that hasn’t integrated an electric charging pump yet.
there is a larger access to charging ports
the duty to tackle emissions is more severe in densely populated areas
the distance one has to travel is generally less than in rural locations
Income gap between the richest and poorest neighbourhoods in Southwark
Currently, electric cars are a luxury the majority of people simply cannot afford, regardless of how politicians and environmentalists push for greater integration of EVs into society.
So, how could we go about making electric cars and other EVs more affordable for the general population? In an industry where so many workers are already heavily exploited, there are a number of not only financial, but also ethical considerations to take into account as we try to uncover the answer.
Is it all only a matter of time? Let’s take a look.
To understand what we mean by ‘affordable’, we first need to look at what the financial situation is like for people in the UK and around the world.
In recent years, the economic climate in the UK has worsened considerably. According to the Office for National Statistics (ONS):
inflation rates saw a peak of 9.2% in February 2023
inflation is currently at 19.2% for food and non-alcoholic beverages, and is predicted to rise even further in the next few months
the price of motor fuel has finally fallen from a peak of 43.7% in July 2022 to -5.9% in March
gas and electricity prices are up 129.4% and 66.7% respectively since March 2022
This is due to a wide mix of factors, including the impact of the COVID-19 pandemic, supply chain issues due to the war in Ukraine, and an overall depletion in gas and oil deposits. These issues aren’t only specific to the UK – similar effects are being felt globally, and have only recently begun to trend downwards.
In the UK, the average wage is around £33,000, but there are huge disparities between the North and South. For example, the highest-paid areas include London and the South East, while the lowest-paid areas are predominantly found in the North and East Midlands of England, as well as in Northern Ireland.
In 2022, the average amount of disposable income fell by 0.6%. But this was felt most keenly by the poorest fifth of the population, who saw a decrease of 3.8%, according to an ONS household finances survey. This brought their disposable income levels down to £14,500, and also included a reduction in overall income before tax, as well as any additional bonuses and cash benefits.
When the average cost of a new EV in the UK is just under £50,000, it’s no wonder that the vast majority of people are unable to afford the range of electric cars currently on offer.
What is considered ‘affordable’?
It’s easy to be lured in by shiny new vehicles and promises of next-to-zero carbon emissions. There’s no doubt that EVs are the ‘next big thing’ in the world of transportation, so it can take a strong amount of will-power to not impulse-buy the first electric or hybrid car you see when looking for a replacement.
But it’s vital that people think with their heads, not their hearts, when it comes to financial matters.
To put this into perspective, someone earning just under the average wage of £30,000 would only be able to reasonably afford a car worth just over £8,000 before it became too much of a financial burden.
Alternatively, a person working 40 hours a week for minimum wage (£10.42), and earning a yearly salary of £21,673.60 would be able to afford a car worth a maximum of £5,418.40 – ten times lower than the average cost of a new EV.
Even the acclaimed ‘cheapest’ electric cars have a starting price of “just £22,335”. By applying the aforementioned advice, you would need a salary of £89,340 for £22,335 to be 25% of it, which is wholly inaccessible for nearly everyone in the country.
Of course, there are ways to mitigate the cost, and make buying a car more accessible. For example:
Paying in instalments is an option, where the cost of a car is split over several months or years.
Second-hand electric and hybrid cars are available, but the amount of EVs currently on the market is vastly outnumbered by their fossil-fueled counterparts, simply due to how long each type of vehicle has been in circulation. Nevertheless, they are a very attractive option at the moment.
You can hire a vehicle if you don’t need it for an extended period of time.
The task of developing more affordable EVs is not one to be taken lightly. There are a plethora of financial, environmental, and ethical considerations to take into account to ensure operations are conducted sustainably.
It would be convenient if you could make EVs more affordable by sourcing cheap materials, but workers mining lithium, cobalt, and other raw materials that go into EV batteries are already pushed to their limits.
Having more EVs on the road is all well and good, as long as the appropriate infrastructure is there to support them. There are not currently enough charging pumps as it is, and it’s not always a viable option to have a pump installed in someone’s home, especially for people who live in terraced houses on long, narrow streets.
An increase of EVs means an increase in power consumption when charging their batteries. Do the main providers of EV electricity use renewable resources to provide power, or do many fall back on fossil fuels? And, if EVs become more affordable and more people are encouraged to buy one, will there be enough power supply to meet the demand?
Now that we have taken important factors into consideration, let’s have a look at some potential solutions EV developers can employ to make electric cars more affordable. It’s a difficult subject to navigate, but here are six suggestions for how manufacturers, councils, and governments can help develop a more affordable range of vehicles.
1. Focus on efficiency, not luxury
There is currently a desire to make EVs as luxurious as possible so as to attract wealthy investors. Companies need to take a step back and focus on marketing cars to the average citizen, people who may not have much money to spend, but still require a car.
While comfort is an essential consideration, many “luxurious” features such as the built-in console and operating system used by Tesla models are not a necessity, and can reasonably be taken out to lower costs.
2. Make second-hand vehicles more accessible
As it stands, many second-hand EVs are nearly as expensive as their new counterparts. The ones that aren’t often come with a plethora of problems such as a worn down battery. But encouraging people to sell their used EV and then subsidising the cost for those browsing the second-hand market would encourage more people to see EVs as an option.
Recently, the used car market has become vastly more expensive than it has been previously due to a microchip shortage that is affecting production worldwide. This, combined with the cost of a decent EV battery, has led to a sharp rise in the price of both EV and regular second-hand vehicles.
In France, a ‘social leasing scheme’ is due to be implemented in the latter half of 2023, which would give low-income families access to EVs for as little as €100 (around £90) a month.
Back in June 2022, the UK government ended their plug-in car grant, which had previously helped boost the EV car market from 1,000 sales in 2011 to 100,000 sales in the first half of 2022. While the money that would have continued to be directed towards this grant will now go on to fund other aspects of EV development, the issue still remains that many families cannot afford electric and hybrid cars in their current state, both via the regular market, or on the second-hand market.
3. Plan for the future
When it comes to developing new houses, many are already being fit with solar panels and other ways to generate power renewably. If every new house included an EV charging point, then people buying electric cars would not have to fork out additional costs to have a plug installed on their property, which would save them time and money.
The same is applicable for new development of roads or service stations. Currently, many EVs do not have the same level of mileage as their petrol and diesel counterparts. Frequent charging points in lay-bys and service stations would lessen the concern that your car wouldn’t be able to make it to its destination, which is a particular concern for people who travel frequently for work, or who have to travel long distances regularly.
4. Offer payment plans and rewards for people buying EVs
There is a big push to reduce carbon emissions across the country, but there is very little being done by the government to help people achieve this. Rather, new laws and regulations are being put in place that make it harder for people to travel, such as the Green Zones in areas like Bristol and London, and people are fined for driving in these areas even if they have no other choice.
This takes essential money out of the pockets of some of the worst affected in society, who can barely afford to keep their current car running as it is, let alone buy an entirely new one. Offering flexible, friendly plans to help encourage people to adopt more electric vehicles would provide a good incentive to make the switch to EVs.
In 2015, the state of California implemented a ‘Replace Your Ride’ program. Residents were able to receive up to $9,500 to help replace their current, high-polluting vehicle with an electric vehicle. This saw the sales of plug-in EVs increase by around 50%, and hybrid vehicles by 75%.
5. Make changing out battery packs and cells cheaper
One of the main reasons why EVs are so expensive is because of the batteries they use. These batteries are comprised of thousands of cells, which can made in one of three designs:
Cylindrical: The least expensive, but the least powerful.
Prismatic: 20 to 100 times larger than cylindrical cells, provides more energy and has better heat management.
Pouch: Deliver the most power, but have the least protection due to their plastic casing, so more needs to be done to keep them safe when installed in a vehicle.
As the ability to fix and replace batteries becomes more advanced, it has become possible to replace individual, malfunctioning cells rather than replace the whole unit. This can save a great deal of money, as the estimated cost to replace a battery sits anywhere between $3,500 (£2,775) for older models, to $47,000 (£37,269), according to data from the United States.
6. Be patient
One thing no one can accurately plan for is the future, and how the EV market will look in 5 to 10 years. As it stands, the price of lithium-ion batteries has already fallen by nearly 90% since 2010. And developments into new types of batteries which make use of different elements and materials may help bring that cost down even more.
It could very well be the case that as lithium and cobalt mines are slowly depleted we may see the gradual rise in prices if alternative battery types are not made readily available. Companies such as Renault and Volkswagen are looking towards the utilities of sodium-ion batteries, which are expected to be cheaper to develop than their lithium counterparts.
While sodium-ion batteries are not as powerful as lithium-ion ones, they do not require other materials such as cobalt and nickel, which saves even more development costs. More tests are being conducted to assess the overall capabilities of these new batteries, but we could very well expect to see a new range of electric cars powered by sodium coming off the production line quite soon.
The electric car market is currently a daunting place. The introduction of EVs as a more mainstream mode of transportation can be a little concerning to many people who are used to a certain way of operating.
The constant pressure from governments and activists to adopt more, greener measures can also be a detrimental factor, as people are left with a sense of guilt and urgency to make changes to their life they simply cannot afford.
Greater efforts around the world to make EV cars and, specifically, their batteries more accessible and affordable take time. Still, there are things industries can do now to ease this transition process from non-renewable to renewable vehicle types, such as making sure the relevant infrastructure is in place before cars hit the road.