The advanced transport team at Bloomberg New Energy Finance is constantly analyzing the price of electric cars to see when they will be price competitive with conventional cars. In 2017, the team suggested it would happen in 2026 — under a decade away at that time — and everyone went “Wow! The time for electric cars is almost here.” A year after that, BNEF said 2024 would be the year.
Now another year has gone by and BNEF has adjusted its forecast once again. 2022 is now the year it believes electric cars will become price competitive with cars powered by gasoline or diesel engines.
Why the rapid shortening of the projected timeline? Plunging battery costs. For a midsize US car in 2015, the battery made up more than 57% of the total cost. This year, it’s 33%. By 2025, the battery will be only 20% of total vehicle cost, according to BNEF.
It says price parity will come first for large vehicles in the EU and then spread throughout the transportation sector. A report in ThinkProgress adds that BNEF also forecasts the cost of electric motors and powertrain control systems will drop by a third in the next few years as more of those components are produced by manufacturers worldwide and economies of scale kick in.
When price parity is achieved, shoppers will make their buying decisions based on brand preferences, styling, performance criteria, or the constant pursuit of the next new thing rather than just the sticker price of the vehicles they are considering, and incentives will no longer be needed to drive the EV revolution forward.
It’s Not Just Cars
Falling battery prices will affect other vehicles, like construction equipment, ships, and airplanes, BNEF says. For instance, Komatsu just introduced a small all-electric excavator with this announcement:
“Equipped with an in-house developed new charger, high-voltage converter and other devices, it offers excavation performance on par with the internal combustion model of the same power output, while achieving zero exhaust gas emissions and a dynamic reduction in noise levels. It is an environment and people-friendly machine. Komatsu expects a wider range of applications for this machine, including construction work near hospitals or schools or in residential areas, where contractors have conventionally paid special attention to exhaust gas and noise during work, as well as inside tunnels or buildings.”
CleanTechnica has reported frequently on electric ferries and ships. Stena Lines operates ferries between Sweden and Denmark is adding batteries and electric motors to its vessels. “As both the size and cost of batteries decrease, battery operation becomes a very exciting alternative to traditional fuels for shipping, as emissions to air can be completely eliminated,” Niclas Martensson, CEO of Stena Lines, tells BNEF.
Those of us in the CleanTechnica community have been waiting impatiently for price parity to come to electric vehicles. Now is appears the wait is almost over.