A recent study sheds light on the stark cost differences between owning premium electric vehicles (EVs) and their gasoline-powered counterparts, as opposed to mass-market EVs compared to equivalent gas cars. The findings, part of JD Power’s E-Vision Intelligence Report, underscore a significant challenge facing the EV industry: the absence of price parity with traditional gasoline vehicles.
The study reveals that the five-year cost of ownership for a premium EV is only $287 higher than that of a comparable internal combustion engine (ICE) vehicle. In contrast, mass-market EVs come with a price tag that’s $9,529, or 18 percent more, than their ICE counterparts over the same ownership period. Remarkably, the average premium EV buyer pays a mere 0.4 percent premium compared to owning a gas-powered car.
This non-linear trend can be attributed to relative affordability. Automakers transitioning to EVs often kick off with high-end, costly models, followed by more affordable offerings. In fact, the report notes that a substantial 76 percent of EV sales occur in the luxury market. For instance, Tesla began with models like the Roadster and the Model S. General Motors introduced the Hummer EV pickup and SUV before unveiling the Ultium-based Bolt successor. Rivian follows a similar pattern, with its R1 platform preceding the R2 platform by at least five years, assuming the startup sticks to its 2026 timeline.
Brent Gruber, Executive Director and Global Automotive Managing Director of the Electric Vehicle Experience at JD Power, explains, “Many premium brand dealers are passing through the EV tax credit on vehicle leasing, which makes the cost of their vehicles more favorable.” He adds that even though Tesla is classified as a premium brand, their price reductions and incentives often make them more affordable compared to premium ICE vehicles. Conversely, many mass-market EVs either don’t qualify for tax credits or don’t pass them on to lease customers, diminishing their competitive edge.
The study provides concrete examples of cost disparities. For instance, the Mercedes-Benz EQB has an average five-year ownership cost of $72,107, with a comparable ICE vehicle coming in at $71,420—just $687 less. Similarly, the Ford Mustang Mach-E, considered a mass-market model by JD Power, costs $67,719 over five years of ownership, exceeding the ownership costs of a comparable gas-powered crossover by over $16,000 during the same period.
However, the study predicts that the 2024 Chevrolet Equinox EV could be a turning point towards price parity in the mass market. GM has announced that the Equinox EV, in production at its Ramoz Arizpe plant in Mexico, would start at approximately $30,000 (excluding taxes and fees) for the 1LT variant.
GM CEO Mary Barra commented on this development, stating, “We are at a turning point where EVs will be the mainstream choice for the next generation of customers, and Equinox EV will lead this charge for us.” She emphasized GM’s commitment to offering vehicles across a wide price spectrum through its Ultium platform.
While GM has made similar promises in the past with models like the Silverado EV and the Blazer EV, it has faced challenges in delivering on these price targets. Nevertheless, the JD Power report underscores that the electric compact SUV segment remains a top priority for manufacturers, and upcoming affordable EV models could potentially bridge the price gap in more market segments in the future.
By Impact Lab