Study Predicts EV Prices Will Break Even With Gasoline-Powered Cars In 2025

Electric cars will become more cost effective next to conventional models – but not until 2025, says a new study.

The study by London-based Bloomberg New Energy Finance predicts a break-even point that year, and that electric cars will beat conventional gasoline engine cars in years following.

“On an upfront basis, these things will start to get cheaper and people will start to adopt them more as price parity gets closer,” said Colin McKerracher, analyst at the research firm. “After that it gets even more compelling.”

The study predicts gradually reducing battery prices will be the driver for change, with these costs accounting now for about half the cost of electric cars.

The researcher forecasts battery costs will plunge downward by 77 percent between 2016 and 2030.

The Bloomberg chart shows the gap between average purchase prices of electric cars and conventional gasoline cars in the market now with a forecast through 2030.

The study appears to predict conventional cars will be costing about $30,000 in 2030 versus EVs coming down to somewhere between $26,000 to $27,000.

The current gap in sticker prices is considered to be a significant reason sales of battery electric and plug-in hybrid vehicles have been hovering around the 1 percent mark of total new vehicle sales for several months. Even with $7,500 federal tax incentives and rebates available in several states – along with competitive purchase prices becoming more common for EVs – sales have yet to surge forward.

That may have a lot to do with consumer’s price perceptions when viewing sticker prices, and lack of understanding of how the incentives work. Some market studies have emphasized concerns over limited driving range per charge, lack of charging stations, and lengthy charging time as key reasons sales don’t shoot up.

There’s also fear of the unknown for consumers – and vehicle fleet operators – who haven’t yet owned a plug-in electrified vehicle, or they’ve had a disappointing experience with EV ownership in the past; or at least they’ve heard a few of those stories from other EV owners who were disappointed in the real-world range and performance of their cars.

Renault, maker of the Zoe and other electric vehicles, has an earlier prediction than Bloomberg. By the early 2020s, total ownership costs of EVs will be equal to conventional vehicles with internal combustion engines.

“We have two curves,” said Gilles Normand, Renault’s senior vice president for electric vehicles. “One is EV technology cost reductions because there are more breakthroughs in the cost of technology and more volume, so the cost of EVs will go down. ICE (is) going to go up as a result of more stringent regulations especially regarding to particulate regulations.”

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Swiss investment bank UBS predicts that parity will happen even sooner. Its recent study said the cost of purchasing and driving an electric vehicle may break even as soon as next year. Like the Renault analysis, UBS has built total operating costs into its predictive model.

The investment bank had found that an EV powertrain is actually $4,600 cheaper to produce than it had initially calculated. There will also be much potential to further reduce costs as EVs become more popular.

Price reductions will help drive up the share of EVs in total vehicle sales, according to UBS. That could go as high as 14 percent by 2025, or about 14.2 million vehicles sold per year worldwide.

Bloomberg


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