According to new research, electric cars will cost the same to produce as conventional cars by 2024 and an acceleration in the shift away from fossil fuel vehicles may be imminent.
For example, a new Volkswagen Golf will cost you about $26,000, whereas the automaker’s first mass-market electric car will cost you at least $39,000. This price difference is due to the simple fact that EVs cost more to produce now at this moment, however new research expects them to reach cost parity with gas-powered cars by 2024.
Conducted by investment bank UBS, the research is based on a detailed analysis of batteries from the seven largest manufacturers. The reason the research analysis is focused on electric car batteries is that they are the most expensive part of the car to make, with batteries accounting for between a quarter and two-fifths of the cost of the entire vehicle. If the cost of producing EV batteries drops, then the overall cost of manufacturing electric cars will drop too.
The researchers determined that the extra cost of manufacturing battery electric cars versus their fossil fuel equivalents will diminish to just $1,900 per car by 2022. By 2024, that extra cost is expected to disappear completely.
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 $42.9 billion towards selling electric cars.
Globally UBS said electric cars’ market share would reach 17% by 2025. By 2030 electric cars should account for 40% of global sales.