A Bloomberg NEF report commissioned by Transport & Environment forecasts 2027 as the turning year when EVs will start to become cheaper to manufacture than their ICE equivalents across all segments, mainly due to a sharp drop in battery prices, and increased manufacturing productivity from additional volumes across more new models by more manufacturers.
Batteries, which have fallen in price by 88 per cent over the past decade and are expected to plunge by a further 58 per cent over the next ten, make up between 25 and 40 per cent of the total price of a vehicle. The average pre-tax price of a mid-range electric vehicle is around €33,300, compared to €18,600 for its diesel or gasoline equivalent. In 2026, both are expected to cost around €19,000, while in 2030, the same electric car will cost €16,300 before tax, while its internal combustion equivalent will cost €19,900, and that’s without factoring in government incentives. And when considering total cost of ownership, the difference is even more spectacular because of EVs’ low maintenance costs.
Other reports, such as a recent one by UBS, put the date of parity a few years earlier, by 2024, after which they say there will be little reason left to buy a non-electric vehicle.
In Europe, regulation is pushing the market, as EV is the only technology known to stave off huge fines for exceeding emissions limits. Brands such as Bentley, Jaguar Land Rover, and Volvo have already announced they’ll go full electric by 2030.
In the US, new ambitious infrastructure plan put in place by the Biden administration promises to accelerate this transition. In China, the transition is well under way, with a large number of new EV-only automakers.
One way or another, the future of the automotive industry is electric, and it’s increasingly clear the transition will take place during the remainder of this decade.
