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We are all familiar with the technical issues facing the developers of electric cars, namely energy density and durability. However, the biggest problem likely to affect the mainstream adoption of EVs is cost. In many respects EVs, are mechanically simpler than ICE cars and should be cheaper to build. However, batteries are not cheap, especially lithium ion, and it's not clear when the price will come down.

Shai Agassi is betting the farm on widespread use of electric transportation by building networks of charging stations and battery swap stations. Speaking in Germany, Agassi is claiming that electric cars will be cheaper for consumers to buy than internal combustion equivalents. Up to a point, Agassi is accurate. Sort of. The only way that EVs will be cheaper in the short run is by not including the cost of the battery and leasing them separately for €250-350 per month. In a sense, this is like selling an ICE car without a fuel tank (an expensive one) and leasing that separately. The other element that drives down the "apparent cost" is government incentives for EVs. Of course, this too is a fallacy, since we are paying for that in taxes.

Agassi also points out that the battery lease cost will be comparable to the cost of fueling an ICE vehicle. That is only true in Europe where higher fuel taxes keep pump prices elevated. Here in the U.S., regular gas is only $2.50 per gallon and the numbers simply don't add up.

[Source: Reuters]

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