Despite rising battery costs, auto companies are rolling out more affordable electric vehicles.
Last week, General Motors unveiled the upcoming Chevrolet Equinox EV, a small SUV with an expected starting price of around $30,000 (€29,500) and a range-per-charge of 400km.
Although Equinox EV's exact price won't be revealed until it goes on sale next year, it is expected to be significantly cheaper than the current average of around $65,000 (€64,000).
Hitting a lower price point without significantly sacrificing range is key to getting mainstream buyers to switch to electric vehicles.
Auto industry analysts say that if the Equinox makes efficient use of interior space with plenty of cargo and passenger room, and if it is styled similar to current gas-powered small SUVs, it should be popular among buyers.
The Equinox EV is only slightly more expensive than regular compact SUVs
A $30,000 (€29,500) EV is just a little above the price of a comparable small gas-powered SUV. The Toyota RAV4, the top-selling vehicle in the US that isn't a pickup, starts at just over $28,000 (€27,500).
About 20 per cent of all new vehicles sold in the US are compact SUVs.
"It's a perfect vehicle for a lot of different users, whether it's a small family, maybe an empty nester," says Jeff Schuster, president of global forecasting for LMC Automotive, a Detroit-area consulting firm. "You've got space to haul things, but it's easy to drive."
Previously, EVs pitched price against range
Until the last few years, electric vehicles were either expensive and aimed at affluent luxury buyers, or cheaper but with limited travel ranges. For example, a base version of Tesla's Model 3, the lowest-price model from the top-selling EV brand in the US, starts at more than $48,000 (€47,000). A larger Tesla Model X SUV starts at over $120,000 (€118,000).
The only EVs with starting prices under $30,000 (including shipping) now are versions of the Nissan Leaf and Chevrolet Bolt. Both are smaller than a typical gas-powered compact SUV. The Mini Cooper Electric, Mazda MX30 and Hyundai Kona Electric are in the $30,000s, according to US online car retailer Edmunds.
Kia's Niro EV, Hyundai's Ioniq 5, Ford's F-150 Lightning pickup, the Volkswagen ID.4, Kia EV6, Toyota b24x, Ford's Mustang Mach E, Audi's Q4 e-tron, the Subaru Solterra, Polestar 2, and Tesla Model 3 all have starting prices in the $40,000s.
Why are electric vehicles more expensive than gas cars?
GM may find it difficult to keep the Equinox price around $30,000, largely because minerals such as lithium, copper, cobalt and nickel - key components of EV batteries - have been rising fast. This is due to a finite number of mines and increasing demand as nearly all automakers introduce new EVs.
Ivan Drury, director of insights for Edmunds, says that even if GM is able to keep the Equinox starting price around $30,000, demand likely will be high enough for the company to focus on higher-priced versions. And some dealers have been marking up EVs beyond the recommended retail price due to high demand. In the first half of the year, US EV sales rose 68 per cent from the same period a year ago, to nearly 313,000.
US tax credits could make EVs more affordable
Some EVs could get a whole lot cheaper in the US, too, with federal tax credits of up to $7,500 (€7,400) starting next year as part of the Inflation Reduction Act. But meeting federal requirements may be difficult.
The vehicles and batteries have to be assembled in North America, and the new law phases in requirements that battery minerals and parts have to come from the continent. Most minerals such as lithium, a key battery ingredient, are now imported from China and other countries.
The Equinox checks the North American assembly box. It will be made in Mexico. The company won't say where the battery will be made, but GM has announced three joint-venture battery factories in the US, including one that's operating already in Warren, Ohio.
From there, GM is working on meeting the other criteria for getting the tax credit. "We're really working through the rules and the regulations right now," says Steve Majoros, vice president of marketing for Chevrolet. "We think it's all lining up nicely, but more details to come on that."
Majoros hinted that it may take a couple of years to meet all the government's requirements to get the full credit as GM takes more control of its supply chain for EV parts.
How does the Equinox EV compare to gas versions of the model?
The Equinox EV, Majoros says, is longer, wider and a bit shorter than the gas versions of the same vehicle. GM used new interior packaging methods to create comparable passenger and cargo space to the gas Equinox. The relatively small price difference between the two should get many customers to consider EV over gas, he predicts.
GM CEO Mary Barra has said the company will overtake Tesla as the nation's largest seller of EVs by the middle of this decade. The Equinox EV is a step toward that.
"We think it's going to be one of the products that's really going to help that mainstream adoption really take off in the marketplace," Majoros says.