Electric cars close to achieving cost parity with conventional vehicles - report
Fri 19 May 2017 | Back to news list
A study by analysts from the investment bank UBS finds that electric cars will be cheaper to produce than conventional cars by 2023 in China and by 2025 in the United States. They found that the total cost of ownership of an electric car could be cheaper as soon as next year.
UBS researchers carried out the study by stripping down a Chevrolet Bolt and analysing the costs of all its component parts. They found that the EV powertrain is $4,600 cheaper to produce than thought and that there is more cost reduction potential left. Currently, UBS estimates that GM loses $7,400 with every Bolt sold today, mainly due to lack of scale, By 2025 though, the researchers said, it should make a 5% profit margin,
As a result, UBS raised its forecasts for global electric car sales by 50% to 14% by 2025 or 14.2 million vehicles compared with its previous projection. It raised the forecast for 2021 to 3.1 million from 2.5 million. Europe will lead the way with 30% of its sales electric by 2025. The current share is close to 1%.
Mainstream forecasts for electric car sales range from between 10 and 15% of the global market by 2025.
UBS said the report’s implications for Tesla Inc’s Model 3 are mixed, with advantages from lower costs to its bottom line, but also a bigger threat from the competition like the Audi e-tron Quattro and Jaguar I-Pace in 2018, and the Mercedes EQ in 2019.
Meanwhile, another report by Stanford University economist Tony Seba - 'Rethinking Transportation 2020-30' - goes even further, saying that no more petrol or diesel cars, buses, or trucks will be sold anywhere in the world within eight years. It says that the entire market for land transport will switch to electrification, leading to a collapse of oil prices and the demise of the petroleum industry as we have known it for a century.
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