Electric cars “will be cheaper to produce than fossil fuel vehicles by 2027”

Electric cars “will be cheaper to produce than fossil fuel vehicles by 2027”

Electric cars and vans will be cheaper to produce than conventional fossil-fueled vehicles by 2027, and stricter emissions regulations could put them in pole position to dominate all new car sales by the middle. of the next decade, according to research.

By 2026, larger vehicles such as electric sedans and SUVs will be as cheap to produce as gasoline and diesel models, according to BloombergNEF forecasts, with smaller cars hitting the threshold the following year.

Electric vehicles reaching price parity with the internal combustion engine are seen as a key step in the world’s transition from burning to fossil fuels.

The fall in the production cost of batteries for electric vehicles, combined with dedicated production lines at factories of car brands, will make them cheaper to buy, on average, in the next six years than conventional cars, even before any subsidy. government, BloombergNEF found.

The current average tax-free retail price of a mid-size electric car is € 33,300 (£ 28,914), compared to € 18,600 for a gasoline-powered car, according to the study. In 2026, both are expected to cost around € 19,000.

By 2030, the same electric car is expected to cost € 16,300 before taxes, while the gasoline car will cost € 19,900.

The report’s timeline for cost parity is more conservative than other forecasts, including that from investment bank UBS, which predicted electric cars will cost the same by 2024.

However, forecasters agree that the cost of new batteries will continue to decline in the years to come.

The new study, commissioned by Transport & Environment, a Brussels-based non-profit organization that advocates for cleaner transport in Europe, predicts that the prices of new batteries will drop 58% between 2020 and 2030 to stand at 58. dollars per kilowatt hour.

Reducing battery costs to less than $ 100 per kWh is seen as an important step towards greater adoption of fully electric vehicles and would largely remove the financial appeal of hybrid electric vehicles, which combine a battery with a motor. conventional.

Sales of electric vehicles have exploded in 2020, especially in the EU and China, but environmental activists are calling on governments to introduce stricter emissions regulations to encourage more consumers to make the switch.

The UK government plans to ban the sale of new fossil-fueled vehicles from 2030, while European companies have called on the EU to set 2035 as the deadline for the sale of new combustion-engine vehicles in the block .

Julia Poliscanova, senior director of T&E for vehicles and emobility, said stricter CO2 targets are needed to accelerate the switch to electric.

“With the right policies, battery-powered electric cars and vans can reach 100% of sales by 2035 in Western, Southern and even Eastern Europe. The EU can set an end date of 2035 with the confidence that the market is ready. New polluting vehicles should not be sold for longer than necessary, ”she said.

The high cost of batteries, which represent between a quarter and two-fifths of the cost of an electric vehicle, has previously led the world’s largest automakers to hesitate to abandon production of their profitable fossil-fuel models.

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Reducing costs is seen as key to making EVs more attractive to consumers, especially when combined with increased range – the distance a vehicle can travel before needing to be recharged and an improved charging network. .

“Once you’ve covered over 200 miles per range and have a really good charging infrastructure, it becomes obvious. We saw it in Norway, ”said David Bailey, professor of business economics at the University of Birmingham.

However, he believes the UK government needs to improve the charging network: “We are lagging behind other northern European countries, and we certainly need a much faster deployment of infrastructure. charging, at home, in the street and quickly. “


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