Mass market electric cars’ ownership costs 18 % more than equivalent ICE cars: JD Power Survey

A recent study by JD Power’s E-Vision Intelligence Report has shed light on the significant cost differences between owning premium electric vehicles (EVs) and their gasoline-powered counterparts compared to mass-market EVs and their ICE (Internal Combustion Engine) equivalents. The results underscore a significant challenge facing the EV industry: the lack of price parity with traditional gasoline cars.

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According to the report, the average five-year cost of owning a premium EV is only $287 more than an equivalent internal combustion vehicle. This minimal difference reflects the relative affordability of premium EVs when compared to their gasoline counterparts. In contrast, mass-market EVs come at a much higher price, costing $9,529 or 18 percent more than their gasoline-powered counterparts over five years of ownership.

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This disparity in ownership costs is driven by several factors. One crucial element is relative affordability. Automakers transitioning to EV production often introduce expensive, high-end models initially, which are then followed by more budget-friendly options. As a result, the luxury market currently dominates EV sales, accounting for 76 percent of all EV purchases.

For example, Tesla, a prominent player in the EV market, started with premium models like the Roadster and Model S before launching more affordable vehicles. Similarly, General Motors introduced its high-priced Hummer EV pickup and SUV ahead of its more budget-friendly models. Rivian’s R1 platform precedes the R2 platform by a significant margin, and this trend may continue until 2026.

Moreover, the study highlights the impact of tax credits on EV affordability. Premium brand dealers often pass on EV tax credits to their customers, making their vehicles more appealing in terms of cost. On the other hand, many mass-market EVs do not qualify for these tax credits, and even if they do, dealers might not pass them on to lease customers, undermining their competitive edge.

The study cites examples to illustrate these cost disparities. The Mercedes-Benz EQB, categorized as a premium model, has a five-year ownership cost of $72,107, with a comparable ICE vehicle costing just $71,420, a mere $687 less. Meanwhile, the Ford Mustang Mach-E, considered a mass-market model by JD Power, incurs ownership costs of $67,719 over five years, exceeding its gasoline-powered counterpart’s costs by over $16,000 during the same period.

However, the study offers a glimmer of hope for mass-market EV enthusiasts. It predicts that the 2024 Chevrolet Equinox EV could be a game-changer, moving closer to price parity in the mass-market segment. GM’s promise to introduce the Equinox EV at a starting price of around $30,000 is a step in this direction. The company’s CEO, Mary Barra, expressed optimism about the Equinox EV’s potential to lead the charge in making EVs mainstream. GM’s Ultium platform allows them to offer EVs at various price points, catering to a broader audience.

While there have been instances where automakers have had to revise their pricing strategies due to various factors, the JD Power report underscores that affordable EV models in the electric compact SUV segment hold the potential to bring price parity to more market segments in the near future. In summary, the data emphasizes the challenge of cost parity between EVs and their gasoline counterparts, with mass-market EVs currently lagging behind. However, the emergence of more affordable EVs in various market segments could soon bridge the gap, making EVs a more attractive and financially viable option for a broader range of customers.

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