Electric vehicles (EVs) represent the future of mobility. However, despite growing popularity, one significant barrier remains — their high costs. From battery technology to rare materials and complex manufacturing, multiple factors contribute to why EVs are still expensive for manufacturers — and ultimately, for customers. Let’s dive into the real numbers, industry insights, and market comparisons.

Why are Electric Vehicles Expensive to Manufacture?

1. Battery Costs
2. The battery pack remains the single largest cost component of an EV.

• Battery packs account for 30–40% of an EV’s total manufacturing cost.
• As of 2024, the average battery price is about $139 per kWh (source: BloombergNEF).
• A typical EV with a 60 kWh battery costs approximately $8,340 just for the battery.

Though prices are falling slowly, they remain far from the ideal $100 per kWh that would make EVs price-competitive with ICE vehicles.

1. Raw Materials and Supply Chain
2. EVs heavily depend on lithium, cobalt, nickel, and manganese. Prices for these critical materials have surged due to supply chain bottlenecks and geopolitical tensions.

• Lithium carbonate prices rose by over 300% from 2020 to 2023.
• Over 60% of cobalt is sourced from the Democratic Republic of Congo, leading to ethical and supply risks.

This scarcity drives up manufacturing costs.

1. Manufacturing Infrastructure
2. Building EVs needs an entirely different setup than conventional cars.

• Companies spend billions setting up gigafactories (battery manufacturing plants) and dedicated EV production lines.
• For example, Tesla’s Giga Texas facility cost over $5 billion to set up.
• Traditional automakers like Ford and GM have pledged over $50 billion combined for EV-focused plants till 2026.

These enormous upfront investments add to EVs' pricing.

Impact on Customer Pricing

• Average EV Price in India (2025): ₹15–20 lakh
• Average ICE Vehicle Price: ₹7–12 lakh

That’s almost 50–70% higher pricing for EVs compared to traditional petrol/diesel cars in the same segment.

ModelPrice (Ex-Showroom)Range (Claimed)Tata Nexon EV₹14.74 lakh325 kmMahindra XUV400 EV₹15.49 lakh375 kmHyundai Kona Electric₹23.84 lakh452 km

Even entry-level EVs like the Tata Tiago EV start from ₹7.99 lakh, still pricier than their ICE counterparts.

Competitor Strategies

Tata Motors is leveraging localized battery production and modular platforms to bring EV prices down.

MG Motor is investing in battery recycling and second-life usage to offset raw material costs.

BYD is betting on cheaper LFP batteries (Lithium Iron Phosphate) to reduce dependency on expensive cobalt and nickel.

Despite these strategies, meaningful price parity with ICE vehicles is still 3–5 years away, according to industry experts.

Challenges in Achieving Cost Reduction

1. Battery Recycling Infrastructure is still nascent.
2. Economies of Scale are just beginning to develop in emerging markets like India.
3. Lack of Government Subsidies: Many EV subsidies have been reduced or discontinued after initial phases.

Until production costs significantly drop and mass adoption increases, EVs will continue to remain a premium choice for many buyers.

Conclusion

While electric vehicles are critical to a greener future, their high manufacturing costs — driven by batteries, raw materials, and new production lines — make them expensive for customers today. However, ongoing innovations, strategic partnerships, and economies of scale could see EV prices drop by the end of this decade. For now, early adopters must be ready to pay a premium for driving electric.