Electric cars will be cheaper to own than conventional cars by 2022, according to a new report.
The plummeting cost of batteries is key in leading to the tipping point, which would kickstart a mass market for electric vehicles, Bloomberg New Energy Finance (BNEF) analysts predict.
The large-scale roll-out of electric vehicles (EVs) is seen as vital in both cutting the carbon emissions that drive climate change and in dealing with urban air pollution, which leads to many premature deaths every year. But, despite subsidies in many countries, EVs remain more expensive than conventional cars and the limited range of battery-only cars is still a concern. Currently, just 1% of new cars sold are electric.
However, the analysis published by BNEF on Thursday predicts that the total cost of ownership – combining purchase price and running costs – of battery-only cars will dip below those with internal combustion engines in 2022, even if the conventional cars improve their fuel efficiency by 3.5% a year.
The analysis uses the 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.”
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SOURCE: The Guardian, Damian Carrington