The falling cost of making batteries for electric vehicles combined with dedicated production lines in the automaker’s plants will make electric vehicle purchases cheaper than gas-powered cars on average over the next 6 years. And that even without government subsidies. A great study by BloombergNEF explains that the current average pre-tax sales price of a midsize electric car is $ 40,700 compared to a gasoline car, the study said. In 2026, both are expected to cost around 19,000 euros ($ 23,300).
According to Logan Goldie-Scot, director of clean energy at BNEF and a co-author on the report, low-cost electric vehicles are inevitable in the short term. “We no longer talk about that transition point is still a decade away,” he said. “For many vehicle segments, it’s in the next 3 or 4 years.”
What does it take to fully electrify transport?
What changes are pending so that 1.1 billion electric cars can be charged and the atmosphere can be decarbonised by 2050?
Electric cars are now almost equivalent to internal combustion engine (ICE) vehicles, and one reason for this convergence in price terms is advances in battery technology. The cost of lithium-ion batteries has decreased by around 90% over the past decade, so most automakers have announced that they will electrify their fleets. That has drawn increasing attention to batteries – which are still about a third of the cost of an electric car – and the manufacturers who make the batteries.
The average price per kilowatt-hour for a lithium-ion battery has fallen to $ 137, 13% less than in 2019, according to a survey of nearly 150 buyers and sellers. A decade ago, these batteries were priced at more than $ 1,100 sold per kilowatt hour. According to BloombergNEF, the threshold for price parity with gasoline engines is around 100 US dollars / kWh. In the report, BNEF analysts said they expect battery manufacturers to hit $ 101 / kWh in 2023. For the first time, the survey found that some prices were reported at competitive levels, with batteries for electric buses selling at $ 100 / kWh in China.
The battery capacity has increased 13-fold in the last 5 years up to 2020 and is expected to quadruple to over 3,000 gigawatt hours of battery capacity in the next decade. That is enough to produce at least 50 million electric vehicles, around 50% of all car sales. Increased battery capacity is an essential element of the overall electrification of transportation and a resulting lower-cost electric vehicle fleet that you can choose from.
Tesla, which has close relationships with Panasonic in the US and CATL and LG Chem in China. The world’s largest manufacturer of electric vehicles pays an average of $ 115 per kilowatt hour for batteries, up from $ 128 last year. At that price, the 80.5 kWh battery in Tesla’s long-range Model Y would cost the automaker about $ 9,250.
In the US, too, the ambitious infrastructure plan of the Biden government promises to accelerate the transition to electric vehicles, which in turn is fueling automotive companies’ interest in more electric vehicles in their range.
Several recent OEMs (OEMs) commitments to electrification are moving more people towards zero-emission transportation. GM has announced that it will offer 30 new electric vehicles worldwide by 2025. Ford has allocated $ 29 billion for electric and autonomous vehicles. BMW, Jaguar, Honda and Volkswagen have also made significant commitments for electric vehicles. Toyota plans to bring 15 fully electric vehicles to market by 2025.
Clean Energy Act for America reviews electric vehicle tax credits
The Clean Energy for America Bill would remove the existing and stifling cap on electric vehicles: $ 7,500 with no cap, but an exit for individual automakers once they hit 200,000 total electric vehicles sold. Tesla and GM have hit this limit, so EV sales by these two manufacturers are not currently eligible for the tax credit. Removing these barriers will make electric cars appear much cheaper to the average US auto consumer.
The recent announcement that the electric vehicle tax credit has been revised is really good news. The U.S. Senate Finance Committee tabled a bill in May that would increase electric vehicle tax credits up to $ 12,500 for electric vehicles assembled by union workers in the United States. The bill would restrict tax credits to vehicles with a sale price below $ 80,000 in order to qualify for the tax credits.
The new version of the loan would expire over 3 years once 50% of US car sales were electric vehicles. The U.S. Senate Finance Committee says the bill:
“… replaces the old rules with a market-based, technology-neutral system in which the reduction of CO2 emissions becomes the guiding star of America’s energy future … Instead of yesterday’s 44 tax breaks, the new system will stimulate three goals: clean energy, clean” transport and energy efficiency . “
Final thoughts on cheaper electric vehicles
Of course, the chip crisis is hitting the automotive industry in general, and the EV space in particular, hard and will most likely continue until 2022. It will lead to production problems in the near future.
However, as cheaper EVs take on global proportions, the momentum will be driven by European and Chinese markets, which are projected to account for 72% of all passenger vehicle sales in 2030. By 2030, China and Europe are said to be the feat of 50% of all cars on the road being electric vehicles. This is backed by policies emerging from European vehicle CO2 regulations and China’s EV credit system, including fuel economy regulations and city policies aimed at restricting sales of new internal combustion vehicles.
In the US, nearly 60% of households have 2 or more cars, and many have the option of installing charging at home. Around the world, governments and automakers are focused on selling newer, cleaner electric vehicles as a key solution to climate change. With 550 EV models available from global automakers by 2022, interest in EVs will grow exponentially. A study by the Massachusetts Institute of Technology definitely found: “Electric vehicles are better for the climate than gas-powered cars …[and already] Electric cars can even save drivers money in the long run. “
Since the effects of the climate crisis are becoming more evident from year to year and there is clear science on the health effects of air pollution, it is imperative that we switch from gasoline to electric vehicles as soon as possible. Lower costs are seen as critical to making EVs more appealing to consumers, especially when combined with greater range – the distance a vehicle can travel before it needs to be charged.
While a lot of charging network improvement activities are floating around, the final steps are falling to create lower EV costs, making the switch to all-electric modes of transport a lot easier for consumers.
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