Electric vehicle cost parity close by 2027 – report

Electric cars may be cheaper to manufacture than internal combustion-powered vehicles within three years, says a new report.

Electric cars could be cheaper to build than petrol and diesel vehicles by 2027 – sooner than previous forecasts – leading to potential cost-parity in showrooms, according to market research firm Gartner.

The organisation says electric vehicles will enter a ‘new phase’ in 2027 as car makers reduce production of models with internal-combustion engines and expand battery-electric manufacturing using smarter processes.

This expansion, says Gartner, will lower production costs – helping reduce the higher list price of most electric vehicles compared to their petrol/diesel equivalents for consumers.

“New [car company start-ups] want to heavily redefine the status quo in automotive,” said Pedro Pacheco, Vice President of Research at Gartner, in a statement.

“They brought new innovations that simplify production costs such as centralised vehicle architecture or the introduction of gigacastings that help reduce manufacturing cost and assembly time, which legacy automakers had no choice to adopt to survive.”

For car makers, while battery costs will remain significant, this re-strategising of manufacturing would see electric models become potentially profitable.

This means manufacturers would find it far easier to expand electric line-ups – and increase production – where and when needed.

As well as a lower showroom sticker price, resale value – currently worse for electric vehicles than petrol/diesel cars – would also likely improve.

For some, such as US giant Ford, initial forecasts have seen them lose considerable sums on every electric car sold and revert back to a near-term focus on more profitable existing petrol and diesel models.

General Motors, Mercedes-Benz and Renault have all recently wound back electric vehicle forecasts and committed to offering internal-combustion engines for the foreseeable future.

The challenges facing car makers include a reduction in government-funded incentives, with Gartner’s research predicting this will accelerate the takeover or bankruptcy of younger electric start-ups.

Candidates may include Ohio-based electric pick-up maker Lordstown Motors, formed in 2018, and declared bankruptcy in March 2024.

Similarly, US electric car maker Lucid Motors continues to lose billions after repeatedly missing production targets.

Its CEO Peter Rawlinson told Reuters the company will need more fundraising to survive beyond 2025 despite being more than 60 per cent owned by Saudi Arabia’s Public Investment Fund

While cheaper to produce, Gartner says accident repair of electric vehicles will still cost around 30 per cent more than petrol/diesel models in 2027, which may lead to higher insurance premiums for owners.

This issue has already been seen through several car rental companies selling off electric cars due to high repair costs in favour of cheaper petrol models – flooding the used-car market to again reduce resale values.

The post Electric vehicle cost parity close by 2027 – report appeared first on Drive.

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