Sticker Shock: An Electric Car Could Soon Be as Cheap as Your Gas Guzzler

Unlike the Energizer Bunny, battery-powered electric vehicles don’t keep going and going and going.

One of electric cars’ biggest drawbacks is their limited range—the high price of lithium-ion batteries has left manufacturers trying to balance the line between affordability and functionality. Each extra mile of range means more battery power, resulting, for instance, in a near-six-figure sticker on Tesla Motors’ 265-mile Model S.

But there’s good news for those thinking of ditching the fossil fuels. New research shows that the cost of lithium-ion batteries is declining, which means the price gap between gas guzzlers and electric cars could narrow.

The cost of lithium-ion batteries declined 14 percent a year between 2007 and 2014, researchers Måns Nilsson and Björn Nykvist of the Stockholm Environment Institute found in a recent study. These types of batteries, which make up about one-quarter to one-half of the price of electric cars, used to cost $1,000 per kilowatt-hour (kWh).

Today, market-leading electric vehicle manufacturers are using battery packs that cost around $300 per kWh—below projections on what batteries would cost by 2020.

“The cost compared to conventional cars is disappearing,” Nilsson said.

The rapid decrease in battery costs could bring about an electric car revolution sooner than anticipated, and that would be welcome news for smog-choked cities.

Between 1980 and 2012, 80 percent of carbon emissions in metropolitan regions came from vehicles, according to data compiled by Boston University researchers.

A dense population means dense emissions, but expecting all cities to have efficient public transportation is impractical, according to Sam Sturgis of CityLab. And with more Americans living in cities, electric vehicles could help urban dwellers stem the increasing carbon emission tide in their communities.

But even with the price of electric cars becoming less of an issue, other challenges still exist.

“At the moment, the biggest barrier is consumer experience and being exposed to this new type of car,” Nilsson said.

For an early success story, Nilsson cites Tesla, which regularly outsells top models from Mercedes and other luxury automakers in California.

The company started by creating an expensive sports car that happens to be electric, and then made the cheaper, albeit still pricey models. The forthcoming 200-mile-range Model 3 is expected to sell for $35,000. Chevrolet, meanwhile, announced last year that by 2017 it would bring to market a $30,000 (after tax rebates), 200-mile-range car called the Bolt.

Nilsson said people used to think that electric cars were only for geeky, environmentalist types. “They’ve shifted the narrative around electric vehicles and made it cool to own a Tesla,” he said. “I think five years from now there will be a commercial breakthrough.”