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Electric Cars Could Cost Less Than Gas-Powered Vehicles by 2023

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Reducing and eventually eliminating the price parity between gas-powered vehicles and EVs will be an important step in massively changing buyer trends.

Over the past few years, various experts have spoken out on this subject and there have been a host of responses. Recall that GM CEO, Mary Barra, famously mentioned that she didn't believe her company's electric vehicles would be profitable before 2023.

This week, another group is talking about 2023: BloombergNEF (New Energy Finance), an energy efficiency research firm. A new report by the firm concludes that by that year, the average market price per kWh will be $101. That’s getting mighty close to the $100/kWh benchmark at which experts estimate the cost of producing electric vehicles will be comparable to that of gasoline-powered models. If governments continue to offer incentives, that would make EVs more financially advantageous for consumers to go electric – even before they factor in savings on gas and reduced maintenance costs.

The firm's report explains that already in China, the price of batteries for electric buses operating there has dropped below $100/kWh.

You may recall that two years ago, at just about this time of year, we reported on a Chinese firm's prediction that EVs could become cheaper than gas-powered cars by 2025. Changes may happening a faster pace than hoped.

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Elecgtric motor of the Mini Cooper S E
Photo: V.Aubé
Elecgtric motor of the Mini Cooper S E

As for the average global price of batteries in 2020 across all segments of electric vehicles, it has reached a new low of $130/kWh. This represents an 88% drop from the 2010 price of $1,100/kWh.

Which illustrates pretty clearly how much progress has been made with prices in 10 years.

To explain its findings, BloombergNEF points to the increase in production due to sales growth, lower manufacturing costs, the price of materials and new battery models as the main factors that have contributed to the drop in prices. This is essentially a question of basic economics. If more manufacturing is done, prices fall as the entire ecosystem adjusts and becomes more efficient.

The report indicates that expected battery costs may still fluctuate somewhat, but they are estimated to be about $58/kWh by 2030. A major contributor to cost reduction is the eventual introduction of solid-state batteries in vehicles. BloombergNEF's analysis indicates that the production costs for solid-state batteries are 40 percent of those of current lithium-ion batteries.

Battery pack for electric powertrain
Photo: Nissan
Battery pack for electric powertrain