Current Costs of EV vs. Traditional Cars
Compared to the $22,600 cost of a traditional internal combustion vehicle, EV (electric vehicle) production remains a more expensive option costing consumers around $40,500 for an average EV. Despite the increased cost of purchasing an electric car, EV sales have been skyrocketing in recent years, with 2020 seeing a 43% rise. This boost in sales happened even as overall car industry sales fell by 20% from the COVID-19 pandemic. The increase in EV sales indicates the market’s massive emergence.
With a clear upward trend in sales within the EV industry, production has seen a massive expansion among different car companies. In fact, car company Ford has plans to begin production on its own solid-state batteries by 2025 to ease overall costs and increase EV capacity. At the same time, Ford, along with car company BMW, invested heavily in solid-state battery startup company Solid Power. These investments from big company names within the industry serve as major points toward lowering EV production costs.
Furthermore, EV production is seeing support from the United States government. In fact, in an effort to keep up with China’s economic progress, the US has proposed to spend $174 billion to help boost EV production and increase the amount of charging stations across the nation. There are also proposals for an additional $100 billion worth of consumer rebates in order to offset the current cost disparity.
Projected Cost Decline of EV Production
While there is still a difference in cost between an EV and a regular car to consumers, this difference is expected to diminish heavily in the near future. BloombergNEF projects that the cost of electric cars will be cheaper to produce than regular cars by 2027. Larger vehicles like full-sized sedans and SUVs will be cheaper to manufacture by 2026.
These changes would translate to both traditional internal combustion cars and electric cars costing around $23,100 to consumers in 2026. By 2030, EVs will cost significantly less, averaging $19,800, with the price of an average traditional motor car remaining close to 2026 levels.
While the projections by BloomberNEF are optimistic, many other sources believe the transition could happen even sooner. In fact, investment company UBS has projected the switch to EV models to become cheaper by 2024. If this were to be true, the consumer transition to EV could take place on an even faster timeline, especially as environmental sustainability becomes a larger selling point for many people.
This change in cost will largely take place due to the declining price of battery production, with most predictions expecting the price of manufacturing to drop by over 58% by 2030.
About the Author
Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.