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Electric vehicles set to be as cheap as conventional models by 2024

According to new research from the investment bank UBS, electric cars will cost the same as
conventional vehicles within four years and it predicts that we are about to see an acceleration away
from traditional fossil fuel powered vehicles.

The research says that the difference in cost of producing battery and conventional vehicles will narrow in the next few years and disappear almost entirely by 2024.

The report’s findings are based on the analysis of batteries manufactured by the seven largest manufacturers.

The findings are important as reaching cost parity has been seen as crucial in driving the transition away from currently profitable internal combustion engine models to electric vehicles.

Batteries account for up to 40 per cent of the cost of an electric vehicle, but UBS expects that battery costs will drop to less than $100 per kilowatt hour by 2022.

UBS warns that traditional car manufacturers could be left behind as the market goes electric. Both Tesla and Volkswagen have already committed billions to investing in electric cars.

The fall in costs could also impact hybrid electric vehicles, which combine a battery with a conventional engine.

The cost difference between electric and conventional vehicles remains significant with electric vehicles costing anything between £10-20k more than there fossil fuel counterparts, so a rapid fall in the costs of producing battery vehicles will be welcomed and, according to UBS, will trigger a much faster switch to electric vehicles than was originally expected to be the case.

At present EV and hybrid vehicle sales in both China and Europe are booming and account for something like 10 per cent of total European car sales.

According to UBS by 2030 electric vehicles will account for upwards of 40 per cent of total sales.

The next big challenge will be manufacturing enough batteries, hence the growing interest in subsiding the development of multiple ‘gigafactories’ across Europe.

Author
Neil Tyler

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