A new report is claiming that electric vehicles will reach price parity with their internal combustion predecessors by 2027, signaling potential rapid innovations and tumbling construction prices in the world of electrified vehicles.
The report says that as government mandates on emissions become increasingly more stringent, automakers have been working to fast-track the development of new electric models.
The result of this widespread investment into the development of electric vehicles is the acceleration of the tipping point known as price parity between electric vehicles and their internal combustion (ICE) predecessors.
The report says that electric vehicles will rech price parity with their internal combustion relatives by 2027, far sooner than previous forecasts anticipated.
By 2026, the development and production of electric SUVs and sedans is set to match the price of developing a petrol or diesel internal combustion-powered unit, and fleets of compact, small passenger cars will reach the same point within twelve months.
The research says that the pre-taxation price of a medium-sized electric passenger car is around €33,300 (AUD $52,000), while the production of a petrol-powered vehicle costs €18,600 (AUD $29,060) to build.
Researchers say that the falling costs of battery production, combined with investments from manufacturers into the retooling of their factories will bring this figure down dramatically by 2027.
They forecast that the production cost of an internal combustion engine will remain around the same, at €19,000 (AUD $29,705) while the cost of producing an electric vehicle will drop dramatically to around the same €19,000 mark.
What’s more, they forecast that by the turn of the decade, the cost of producing an all-electric vehicle will be more than €3,000 cheaper than the petrol-powered equivalent, with EVs costing around €16,300 (AUD $25,478) before tax, and petrol cars hovering around the same €19,000 (AUD $29,705) price point.
Interestingly, these forecasts are not the only major predictions of EVs reaching price parity in the very near future. Earlier this year, USB forecasted that EVs would reach price parity with internal combustion engines by 2024.
Electric Vehicles to Reach Price Parity with Internal Combustion Engines by 2027
The importance of electric vehicles reaching price parity with their internal combustion competitors should not be underestimated.
It is seen as perhaps the most significant turning point for the mass adoption of electric vehicles, especially considering that at the moment, consumers need to make some sacrifices while opting for an EV over an ICE-powered model.
As a result of being relatively new vehicles, manufacturers are largely unable to compete with the range figures that petrol and diesel-powered vehicles offer.
With new innovations and developments in the world of battery capacity, this is set to change in the near future, but mass adoption is unlikely until there is a major incentive for the public to opt for EVs over a petrol-powered car.
In order to reach price parity, the development and production of an electric vehicle’s battery pack must fall below the $100 per kilowatt-hour
A recent study commissioned by the Transport and Environment organisation based in Brussels forecasts that battery prices are set to drop by more than 58% between 2020 and 2030, to around $58 per kilowatt-hour.
Senior Director of Vehicles and E Mobility, Julia Poliscanova has told The Guardian that “with the right policies, battery-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 in 2035 in the certainty that the market is ready,” she said. “New polluting vehicles shouldn’t be sold for any longer than necessary.”
In reference to the range figures of EVs, Professor of business economics at the University of Birmingham, David Bailey added that “once you are well over 200 miles per range, and you’ve got a really good charging infrastructure, it becomes a no-brainer. We’ve seen that in Norway,” he sadded.
“We are lagging behind some other north European nations, and we certainly need a much more rapid rollout of the charging infrastructure, at home, on-street and fast.”