26.2.2016EVs set to be cheaper than conventional cars by mid-2020s
Electric vehicles (EVs) are set to be cheaper than conventional cars within the next decade according to a report by Bloomberg New Energy Finance. The analysts think that, despite current low oil prices, the huge reductions in battery cost expected in coming years mean that EVs will be cheaper by the mid-2020s.
With a number of manufacturers set for large scale plug-in product roll-outs, the large scale of production for electric vehicles will help bring costs down below those of conventionally-powered cars.
Currently, EVs are more expensive than internal combustion engined cars (ICE), account for a little over one per cent of the market and there are concerns from some drivers over range. However, with longer-range models coming to market, along with new models from the likes of BMW, VW Group, Volvo, Hyundai/Kia, Jaguar Land Rover, PSA Peugeot Citroen and the Renault Nissan Alliance, consistent advances in technology and reduction in price is set to see EVs become better value that conventional models, even if ICEs improve their fuel efficiency by 3.5 per cent each year.
Bloomberg project that oil prices will be between $50-70 a barrel in the 2020s, though if the price remains low and sits at $20, the tipping point for EVs will only be pushed back between three and nine years.
Salim Morsy, senior analyst at BNEF, said: "In the next few years, the cost-of-ownership advantage will continue to lie with conventional cars, and we therefore don't expect EVs to exceed 5 per cent of sales in most markets â€“ except where subsidies make up the difference. However, that cost comparison is set to change radically in the 2020s."
Colin McKerracher, lead analyst at BNEF, added: "At the core of this forecast is the work we have done on EV battery prices. Lithium-ion battery costs have already dropped by 65 per cent since 2010, reaching $350 per kWh in 2015. We expect EV battery costs to be well below $120 per kWh by 2030, and to fall further after that as new chemistries come in."
Projections include that 41 million cars sold around the world each year - 35 per cent sales â€“ will be EVs in 2040, with 25 per cent of all cars being an EV by then. This would cut oil consumption by 14 per cent - saving 13 million barrels of crude oil a day - and EVs would be using 8 per cent of all electricity generated - 1,900TWh.
You can see the full findings from the report here.