New studies show that during the next decade, the fast replacement of combustion engine cars by electric vehicles will completely revolutionize the way people get around.
The Rocky Mountain Institute released a paper on Thursday projecting that the price of batteries, which make up around 40% of the cost of an EV, will drop from $151 per kilowatt hour (kWh) now to between $60 and $90 per kWh by 2030.
This dramatic drop will allow EVs to achieve global up-front price parity with gas-powered vehicles by decade’s end. The estimate predicts that by 2030, affordable EVs would have quickly risen to grab more than 60% of total car sales around the world.
The exponential growth of the number of electric vehicles on the road is “not radical at all,” according to Kingsmill Bond, a senior principal at RMI. That’s to be expected, as the saying goes.
This study demonstrates that in order for EVs to compete with or undercut the sticker price of equivalent internal combustion cars, battery prices must fall below the $100 per kWh level. The substantial decline in battery prices is a result of constant innovation in battery chemistry, material, production, and integration.
In order to stay competitive, automakers are pouring resources into improving electric vehicles’ drivetrains, components, and software. Since batteries account for such a substantial amount of total expenditures, little improvements in efficiency can have a significant impact on overall cost.
According to RMI’s research, Europe, where EV sales are rising quickly, may be the first region where price parity occurs. In Europe, electric vehicles may become cheaper than gas-powered vehicles as early as 2024.
As EVs gain market share worldwide, the world’s largest auto market, China, will reach parity in 2025, followed by the United States in 2026. By 2027–2028, the majority of international markets would have reached a critical mass.
Once the initial outlay is covered, EVs will have a clear advantage due to their less ongoing costs due to their lack of fuel and maintenance requirements. RMI predicts that by 2030, the total cost of ownership for EVs will be lower than that of gas automobiles worldwide.
RMI predicts a minimum six-fold increase in global EV sales between 2022 and 2030, fuelled by price competitiveness and other policy variables. By the end of the decade, EVs would account for a stunning 62-86% of all new vehicle sales.
Similar forecasts for the upcoming price parity turning point were made in a different study from the University of Exeter. According to the forecast, widespread use would first emerge in Europe in 2024, then in the United States and China in 2026, and finally in India in 2027.
Since electric vehicles have more simpler drivetrains and fewer parts, prices for compact and midsize vehicles will fall to competitive levels earliest. However, widespread use will be spurred by lowering battery prices across all vehicle categories.
The study demonstrates how progress in battery technology is always shifting the target prices for EV cost curves. Estimates made even over the past few years are being quickly surpassed.
Change has been hastened by automakers’ financial involvement. Since virtually every major automaker is working on many new electric vehicle models, demand is set to skyrocket once prices hit a sweet spot.
A major factor in the worldwide shift away from internal combustion cars is government policy. Sales of new gas cars will be outlawed in the European Union as of the year 2035. While there is no national goal in the United States, some states are looking at phase-out dates in the 2030s.
As the economy improves and government policies become more favorable, it appears that the days of gasoline-powered automobiles are numbered. According to RMI, as EVs have made inroads, the worldwide peak in oil demand from passenger automobiles has already occurred in 2019.
As EV usage increases, it is expected that the sector’s yearly oil consumption will decrease by at least one million barrels by 2030. If predictions hold true, gasoline demand will continue to fall rapidly into the 2030s.
As Tesla and others have pushed forward in the auto business, they have surprised many who had written it off. But experts say the EV revolution is just getting started as battery innovations spur fast mainstream acceptance.
Exactly when gas stations and tailpipes will bring on feelings of nostalgia is still up in the air, but the trends are clear. The allure of electric vehicles rests in its potential to reduce consumer costs, pollution, and upkeep.
The auto industry is on the edge of an electric makeover, with cost parity for batteries expected within the next five years. The findings stress the importance of quick electrification for established automakers currently relying on gas models.