Mainstream EV buyers are being priced out of the market, according to a new study by J.D. Power. While electric vehicles (EVs) now account for 8.4% of the retail new-vehicle market, 76% of sales come from the luxury market.
The study states that while the difference between internal combustion engine (ICE) and EVs are negligible in the premium market, they’re far more substantial in the mass market.
Consider the five-year total cost of ownership of a compact SUV, the largest retail sales segment in the United States. The average premium EV brand buyer is spending $71,707, a mere $287 or 0.4% more than a comparable compact ICE SUV. In contrast, buying an EV costs the typical mass-market brand consumer $60,736, which is $9,259 or 18% more than an ICE vehicle.
A costly choice
“The rapidly growing markets for luxury and mass market EVs are shaping up to be incredibly different places with distinct consumer profiles,” the report states. “As those markets continue to grow, some stark differences are starting to emerge when it comes to relative affordability. Surprisingly, that dynamic is playing out in favor of the premium brand buyer.”
The pricing differences become clear when contemplating leasing a Mercedes-Benz EQB and a Ford Mustang Mach-E.
The Mercedes-Benz EQB has an average five-year cost of ownership of $72,107, according to J.D. Power, $687 more than a comparable ICE vehicle at $71,420. The Ford Mustang Mach-E has a five-year cost of ownership of $67,719. That’s some $16,242 more than the $51,477, it costs to maintain a comparable ICE vehicle.
When it comes to the total cost of a three-year lease, the EQB costs $36,969, or $2,899 cheaper overall than the Mustang Mach-E’s $39,868. But the Ford the full federal tax credit of $7,500. When applied to a lease, it brings the Mustang Mach-E’s cost just below that of the EQB.
Hope springs eternal
That’s little comfort for mainstream compact SUV buyers who would prefer their next vehicle be an EV. A battery electric compact SUV costs $16,000 more on average than their ICE counterparts.
One exception is the forthcoming Chevrolet Equinox EV, which is expected to arrive shortly priced from $40,000, with a base trim expected to arrive in the spring at starting at $30,000.
The arrival of this and other affordably priced SUVs could go a long way towards reversing this trend as competition kicks in from other automakers.