Electric cars 'as cheap to manufacture' as regular models by 2024 according to analysis by UBS, indicating shift away from fossil fuel vehicles may be imminent.
A key factor that is limiting the adoption of electric vehicles is that they are simply more expensive than their gas-guzzling counterparts. For instance, a new VW Golf will cost you about £19,500 ($26,000), whereas their first mass-produced electric car will cost at least £29,500 ($39,000).
The reason for this price difference is due to the simple fact that EVs cost more to produce at the moment, but new research expects them to reach cost parity with gas-powered cars by 2024. There are already some very cheap models on the market, particularly in China, but they are all, shall we say, rather niche.
The research, conducted by investment bank UBS, concentrated on a detailed analysis of batteries from the seven largest manufacturers, because electric car batteries are the single most expensive part of the car to make, accounting for between 25 percent to 40 percent of the entire vehicle cost. Therefore, if the cost of producing EV batteries comes down, as expected, then the overall cost of manufacturing electric cars will drop too.
From the analysis, the researchers determined that the extra cost of manufacturing battery electric cars versus their fossil fuel equivalents will diminish to just £1,400 ($1,900) per car by 2022. By 2024, that extra cost is expected to disappear completely. This is a huge deal considering that it has long been thought that the world will rapidly transition away from vehicles that burn fossil fuels when electric cars cost the same to make as conventional cars.
Based on the analysis, UBS said that carmakers that try to hang on to gas-powered car sales risk being left behind by rivals such as Tesla and Volkswagen, the world’s largest carmaker by volume, which has committed upwards of £32.6 billion ($42.9 billion) towards selling electric cars. Anything that accelerates the transition to electric is good news for both human and planetary health.