Are EVs becoming more affordable for younger buyers?

Global data suggests that the Millennial generation, people born between 1981-1996, are driving positive changes in how environmentally friendly our lifestyles are. Often referred to as the ‘Green Generation’, an EV would be the natural accompaniment to their sustainable, eco-conscious habits.

The problem is that the lower average economic status of this age group limits their ability to commit to the more substantial upfront cost of EV ownership compared with a petrol car. Young Kiwis often struggle with student debt, high home rental expenses, and generally have less disposable income. You can’t enjoy the longer-term savings in battery charging over petrol costs if you can’t afford to buy the car in the first place.

There is, however, increased hope for this generation that they can join the electric revolution as the cost gap between an EV and a combustion engine car is starting to shrink at a decent rate. When you also consider that Millennials are often open minded about shared ownership, a group of friends will soon have a great chance of teaming up to buy an EV.

The Nissan Leaf is by far the most popular and visible EV on our roads, and it’s seen a dramatic reduction in cost over the last few years. Originally, a Leaf would have cost you $69,000 from new, whereas a new model can now be picked up for around $39,000 – still high, but a significant reduction. And you can buy a used Leaf model for around $12,000-$15,000.

These figures are still potentially prohibitive to a lot of young buyers, but the gap is closing and, over the next couple of years, it should shrink even more because of a few factors:

• Lithium battery costs – the traditional battery type of an EV has seen a dramatic reduction in cost over the last ten years. Between 2010-16 alone, there was a 70% reduction and this has a knock-on effect to the average cost of an EV.
• Improved manufacturing efficiency – will allow the production of more affordable vehicles. The simpler they are to manufacture, the more that consumer costs come down.
• The rising cost of fossil fuels – will lead to an even greater demand for EVs. More demand leads to higher production, which creates greater choice and more competition, which generally means lower costs.
• An increasingly flooded market – at the moment there are still not massive numbers of EVs available in NZ, but this is rapidly changing. In another few years, the market will be further flooded with even more used Nissan Leaf models, but also used Hyundai IONIQs, BMW i3s, and others. This will drive down the average price.

Once younger drivers find owning an EV an affordable opportunity, they can enjoy the benefits of battery charging cost-effectiveness, as well as the environmental positives, but there’s more reasons to be cheerful than that:

• More charging stations – there are growing numbers of charging stations around, especially in urban parts of New Zealand. Government agencies are coordinating activities to support the development and roll-out of increased public charging infrastructure.
• Reduced range anxiety – worrying about how far you can travel in your EV is a cross-generational concern, but the battery range is getting stronger and stronger. The Tesla Model 3 Long Range version will be capable of running for 523km and this capability will likely trickle down to other EV models in due course.
• We still need cars – public transport in NZ is fairly limited so, unless you live within the city and spend most of your time there, having a car remains an essential way to get around. An EV allows us to continue enjoying our cars, while practising environmental awareness.
• Minimal servicing – generally speaking, an EV is far lower maintenance than a petrol car. The average EV contains around twenty moving parts, compared with around two thousand in a combustion engine powered vehicle. There’s also no need for oil or grease.

The future can never be predicted with absolute certainty and there could be other limiting factors that prevent Millennials from buying an EV:

• Renting restrictions – the majority of young adults rent their home, rather than owning it, and this impacts on their ability to install convenient, effective EV fast charging stations.
• EVs are often a second vehicle – used for short distance travel, and with another car available for longer journeys. Increased battery range will change this, but it’s currently often the case. Most young people will only own one car, and might opt for something more range-versatile.
• Fear of missing out (FOMO) – given the rapid evolution of EVs over the last ten years, this trend can be expected to continue. Lavishing a substantial amount on a car that could quickly be overshadowed by technological advances on newer models might prevent Millennials from spending that money in the first place.
• Looming RUC charges – at the moment EVs are exempt from road user charges, but this is expected to change. A potential additional $600 per year for having an EV might slightly reduce the overall attractiveness of ownership.