Why electric cars are getting pricier even as batteries get cheaper

Battery prices have fallen precipitously over the past decade. Since batteries are the most expensive component of an electric vehicle (EV), analysts expected that EV prices would decline as well, making them affordable for more people.

It hasn’t quite worked out that way.

Since 2012, the average total cost of an EV battery fell more than 80%, while the average price to buy a new EV in the US rose more than 80%. The main reason for the almost perfect divergence of EV and battery prices is that most automakers are developing luxury EV models before expanding into cheaper, mass-market vehicles. Semiconductor shortages and factory shutdowns during the pandemic have also driven up the price of all cars, both gas-powered or electric.

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