Differing opinions on when EVs will reach price parity

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Words: NZ Autocar
3 Sep 2020

A study published in the UK’s Financial Times suggests that even with falling battery costs, electric cars will still end up being significantly more expensive to build than internal-combustion models. And things may stay that way until at least 2030.

It’s expected that the cost to build a compact EV will drop by almost one-quarter within 10 years, to just over $NZ30k, but that is still roughly 10 per cent higher than what it costs to construct a comparable ICE power car.

Meantime the cost of building a conventional car probably won’t change much in that period. However, they will become more expensive as buyers demand extra features and more sustainably sourced components, according to an automotive expert at data analysis firm Oliver Wyman. Automakers can then charge more for such features that don't cost them that much to install.

EVs will eventually cost much the same as regular cars, probably early in the next decade, according to the automotive analysts, because of falling battery prices. More battery factories will improve economies of scale, and new development, such as solid-state chemistry, could help to lower costs further.

Others have predicted that the critical battery break point of $100 per kilowatt-hour (at which point ICE and electric power should be equivalent) will arrive well before 2030.

Bloomberg New Energy Finance has even suggested that EVs will cost less than the competition both to build and buy before 2025.

With increasing battery storage capacity, the tipping point for EV adoption is now more about cost than range, according to a large study published earlier in the year by Ipsos.

While in Europe EVs might reach price parity with gasoline and diesel vehicles in the near future, it is thought cheapie ICE power small cars might become less affordable in other markets, unless automakers can find further ways to cut costs.

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