Electric cars will be the cheaper option in just 6 years

A new analysis predicts that the total cost of ownership for electric cars will drop to lower than cars with internal combustion engines in 2022.  

Bloomberg New Energy Finance (BNEF) analysts say that due to the rapidly declining cost of batteries, a mass market for electric vehicles will flourish.  The growth of electric vehicles (EVs) is due in part to environmental consciousness and global initiatives to reduce carbon emissions and air pollution.

Currently, only one percent of new vehicles sold are electric.  EVs are still the more costly option and there is little variety for consumers to choose from.  Though combustion engine vehicles are increasing in efficiency by 3.5% per year, EVs are on track to catch up and surpass this quicker than once thought.

The analysis incorporates US government’s projected oil price of $50-$70 (£36-£50) a barrel in the 2020s. If the price is $20, the tipping point is pushed back by between three and nine years.

 

 

Salim Morsy, senior analyst at BNEF, said: “In the next few years, the cost-of-ownership advantage will continue to lie with conventional cars, and we therefore don’t expect EVs to exceed 5% of sales in most markets – except where subsidies make up the difference. However, that cost comparison is set to change radically in the 2020s.”

Colin McKerracher, lead analyst at BNEF, added: “At the core of this forecast is the work we have done on EV battery prices. Lithium-ion battery costs have already dropped by 65% since 2010, reaching $350 per kWh in 2015. We expect EV battery costs to be well below $120 per kWh by 2030, and to fall further after that as new chemistries come in.”

 

 

We've already seen a growth in sales for EV pioneers like Tesla and the new Nissan Leaf.  As prices drop, expect a lot more EV models to be coming out in the next few years.