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Electric cars will equal the production price of conventional cars by 2024
The cost of production of electric vehicles will equal the cost of production of cars on internal combustion engines (ICE) by 2024, analysts of the largest Swiss financial holding UBS believe. After that, a move away from fossil fuel transport will become inevitable, researchers say, cited by The Guardian.
Image source: The Guardian
The difference in the cost of production of electric cars and cars with internal combustion engines by 2022 will be only $ 1,900 per unit, experts say, and by 2024 it will completely disappear. Swiss analyst research draws on fresh analysis of the EV battery industry from seven of the world’s largest suppliers of electric vehicle batteries. According to experts, achieving parity in the production of components for electric vehicles and internal combustion engines is a key factor that will force the world to move away from the use of fossil fuels.
For now, major automakers are reluctant to ditch their lucrative ICE-powered car models due to the high cost of batteries, which are mainly produced by East Asian companies such as LG Chem (South Korea), Panasonic (Japan) and CATL (China). It is noted that the cost of the battery itself can reach a quarter or at least 1/5 of the cost of the entire electric vehicle.
UBS analysts predict that by 2022 the cost of battery production will drop to $ 100 per 1 kWh of capacity. Experts argue that those automakers that will try to maintain the level of sales of cars based on traditional internal combustion engines risk being left behind by more promising and progressive companies such as Tesla and Volkswagen. The latter, for example, is the largest automaker in the world in terms of the number of cars produced per year, and has already announced its desire to invest about 33 billion euros in sales of electric vehicles.
“After 2025, there will be no reason to buy an ICE car,” comments Tim Bush, analyst at UBS.
He also added that not only electric vehicles, but also hybrid models that combine the use of internal combustion engines and batteries will benefit from the reduction in the cost of battery production.
The cost of electric vehicles is still significantly higher than the cost of conventional versions, which limits their sales. For example, the new Volkswagen Golf starts at £ 20,280. In turn, the price of the electric model Volkswagen ID.3, marketed as the German automaker’s first mass-produced electric vehicle, starts at £ 30,000. Jaguar Land Rover, the largest British carmaker, estimates its only all-electric car Jaguar I-Pace at 64,495 British pounds, even after taking into account all government support programs aimed at increasing demand for electric vehicles. The cost of the analogue of the Jaguar F-Pace based on the internal combustion engine, in turn, starts at 44,845 British pounds.
Experts believe that the rapid decline in battery costs will lead to a much faster transition to electric vehicles. It is noted that despite the coronavirus pandemic, there is already an increasing demand for this type of transport in Europe and China.
Independent auto analyst Matthias Schmidt predicts 11 million sales in Europe by the end of 2021. cars, with a million of those sales going to electric and hybrid models. Experts from USB, in turn, predict that by 2025, 17% of the global automotive market will be electric cars. By 2030, this figure will already be 40%.