Tumbling battery prices will see the cost of electric vehicles (EVs) drop below their internal combustion (ICEs) rivals within a decade, according to Bloomberg New Energy Finance.
The tipping point would see arguments for buying EVs and plug-in hybrids (PHEV) no longer relying on cheaper running costs or green credentials alone, but instead on entry price.
The main reason seems to be the continued decrease in the price of batteries, thanks in large part to basic economies of scale – though extra imposts on ICEs in the form of upscaled carbon and NOx emissions taxes will play a role.
As mass production ramps up, batteries (which currently account for about half the cost of EVs) will fall in price by about 77 per cent between 2016 and 2030, according to the recent research.
By extension using these numbers, electric vehicles will also be cheaper to buy in the US and Europe as soon as 2025, with other mature markets to follow.
At that point the main piece of the puzzle in markets like us in Australia comes down to infrastructure.
“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 London-based researcher to Bloomberg.
“After that it gets even more compelling.”
These findings are backed up by EV leader Renault, which predicts total ownership costs of EVs will by the early 2020s equal conventional internal combustion engine vehicles.
The French company’s senior vice president for electric vehicles, Gilles Normand, told Automotive News that:
“We have two curves. 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.
“ICEs [are] going to go up as a result of more stringent regulations especially regarding to particulate regulations.”
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