Will electric cars reduce in price?

Bloomberg’s BNEF report says: Price parity between EVs and internal combustion vehicles is reached by the mid-2020s in most segments, but there is a wide variation between geographies.

The first segment (large cars in Europe) is expected to reach parity by 2022.

Wright’s Law said that “For every doubling of Airplane production the Labour requirement reduced by 10 -15%”. Livewire / ARK Invest believe that this applies to Electric cars, as well as Internal Combustion Engine (ICE) cars. However they calculate that the cost of manufacturing Electric cars is reducing 12% per annum compared to 0.5″ for ICE, the calculation being based on cumulative production. Consequently, as with Bloomberg above, anticipate that Electric cars will cost the same as ICE in 2022 and subsequently will continue to get cheaper.

See Livewire’s video on the economics of Tesla, but the principles apply to all Electric car manufacturing.

Batteries

The largest individual cost in an Electric car is the Battery

Greater investment in Batteries for EV is increasing the energy they can store and reducing the cost and weight.

Lithium-ion battery pack prices fell 87% from 2010 to 2019, with 13% in 2019. Underlying material prices will play a larger role in the future, but the introduction of new chemistries, new manufacturing techniques and simplified pack designs will keep prices falling.