Electric cars to become cheaper in the next four years, study shows

Battery costs – a major factor in EV prices –have plunged nearly 90% in the last decade

An electric car at a charging point at Halfords in Rugby, Britain. Lower battery costs are making electric cars cheaper. Reuters

Electric vehicles may cost about the same as their gas-guzzling brethren in just three or four years – and only get cheaper from there, according to a new report from BloombergNEF.

Electric cars and buses have long been saddled with bigger up-front costs than those burning gasoline or diesel, due to the cost of batteries. But researchers say that price premium will disappear once battery packs reach $100 per kilowatt-hour – a tipping point BNEF expects to occur in 2023, according to its 2020 Battery Price Survey.

Battery costs have plunged nearly 90 per cent in the last decade, from $1,100 per kilowatt-hour in 2010 to $137 this year.

Packs built for cars – as opposed to home solar arrays or pieces of the power grid – cost even less. They now average $126 per kilowatt-hour.

BNEF’s annual survey also found examples of batteries for electric buses in China selling below $100 per kilowatt-hour, said lead author James Frith. China’s average pack price for electric buses is only slightly higher, at $105.

“Within just a few years we will see the average price in the industry pass this point,” said Mr Frith, BNEF’s head of energy storage research. “What’s more, our analysis shows that even if prices for raw materials were to return to the highs seen in 2018, it would only delay average prices reaching $100/kWh by two years – rather than completely derailing the industry.”

BNEF forecasts prices dropping to $58 per kilowatt-hour by 2030. One possible way that price could be achieved is the widespread production of solid-state batteries, which BNEF estimates could be made for 40 per cent the cost of current lithium-ion batteries.