Electric vehicles haven’t quite caught up to internal combustion models in terms overall cost effectiveness. In fact, if it weren’t for government incentives, there would probably be significantly fewer early adopters willing to shoulder the financial burden for the rest of us. However, EVs will eventually become the cheaper option on the market — with or without a tax credit.
While the obvious fueling benefits drastically reduce the cost of ownership, those savings don’t offset the higher buy-in price, especially with gas prices still relatively low. Batteries aren’t cheap, but costs are estimated to drop by around 77 percent between last year and 2030. That may sound like a lifetime of waiting if you’ve been holding out on an electric but, thankfully, the affordability tipping point should occur much sooner than that.
“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 Bloomberg New Energy Finance. “After that it gets even more compelling.”
Bloomberg forecasts EVs will represent around 35 percent of all new light-duty vehicle sales in 2040, some 90 times the numbers seen in 2015. However, the normalization of battery-driven vehicles should help drive down prices to competitive levels by 2025 — at least in Europe and North America. Some automakers expected the reduced cost of ownership to make up the difference even earlier than that.
Renault is anticipating total ownership expenditures on EVs to equal conventional internal combustion units by the early 2020s. Fuel prices will play a significant factor in deciding exactly how soon the change will occur, but it’s safe to say it’s not too far off.
“We have two curves,” Gilles Normand, Renault’s senior vie president for electrics, said in an interview earlier this month. “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 going to go up as a result of more stringent regulations especially regarding to particulate regulations.”
Even if gas prices stay level, regulatory measures against vehicle emissions are likely to keep average ICE production costs from ever dropping. That gives electrics the opportunity to overtake them in 2025 and gradually become more affordable in subsequent years.
[Image: Ford Motor Company]