EVs driving towards price parity

Fuelled by falling battery prices, electric vehicles (EVs) may hit price parity with petrol and diesel models in Europe next year and the US market in 2026, and account for two-thirds of global car sales by 2030.

A report by Colorado-based Rocky Mountain Institute (RMI) predicts battery costs should halve this decade, from $151kWh in 2022 to between $60 and $90kWh.

This should make EVs “for the first time as cheap to buy as petrol cars in every market by 2030 and cheaper to run”.

Batteries are expensive and account for around 40 per cent of an EV’s sticker price. It’s a cost that still makes electrified models unaffordable for many buyers.

However, those prices are steadily coming down as marques invest in new battery chemistries, materials and software to make more efficient EVs, says Kingsmill Bond, RMI’s senior principal.

According to RMI’s analysis, the rapid growth of electric models in Europe and China “implies EV sales will increase at least six-fold by 2030 to enjoy a market share of 62-86 per cent”.

EV sales in the EU climbed by almost 61 per cent in July versus the same month in 2022 for a market share of 13.6 per cent. The trading bloc aims to ban the sale of new fossil-fuelled models from 2035.

The US has yet to commit to when sales of new combustion-engine models will end nationally, but California and New York are targeting 2035 to switch to zero-emissions vehicles, Bond told Reuters. 

According to RMI’s research, oil demand for cars peaked in 2019 and will fall by at least one million barrels per day every year after 2030.

Research released by Exeter University in the UK also predicts exponential growth in EV sales. It suggests they will reach a tipping point in price parity with fossil-fuelled models as early as 2024 in Europe, 2025 in China, 2026 in the US and a year later in India when it comes to “medium-sized cars and even sooner for smaller vehicles”.