Electric Cars To Cost Less Than Gas Counterparts Within One Decade

2017 Chevrolet Bolt


Electric Cars

Nissan LEAF and Renault ZOE – Renault predicts that overall cost-to-own for electric cars will equal that of ICE cars by the early 2020s.

Currently, electric cars are more expensive than ICE cars, but eventually, sooner than later, this will cease to be the case.

Electric Cars

Tesla CEO Elon Musk has explained that the exit rate of battery cells manufactured at the Tesla Gigafactory are “faster than bullets from a machine gun.”

Today, the debate gets sticky when you factor in EV rebates and true cost-to-own. There are so many factors, including the wide variety of electric cars and ICE vehicles.

Pit a less efficient EV (which is more expensive even with rebates) against a highly-efficient ICE car (which is likely small and cheap), factor in current gas prices, and it’s not going to be cut and dry. Also, there are considerations surrounding where people charge, how many miles they drive, etc.

Rebates and all other factors aside, electric cars will be cheaper than gas cars in the near future. Not just cheaper in terms of overall cost of ownership, but cheaper as in sticker price.

Bloomberg New Energy Finance revealed new research that shows that dropping battery costs will make electric cars cheaper in the U.S. and Europe as soon as 2025. This is based on the current EV battery market, which many believe will accelerate even faster than recent estimates. Since batteries can account for up to about 50 percent of the cost of an EV, the impact of cheaper batteries will be substantial. Bloomberg analyst, Colin McKerracher, said:

“On an upfront basis, these things will start to get cheaper and people will start to adopt them more as price parity gets closer. After that it gets even more compelling.”

Renault believes that this may happen even sooner. Tesla has its own Gigafactory, which is driving battery prices down, and the company plans to build several additional battery factories. Daimler has already broken ground on a similar battery factory in Europe, and another battery factory is set to appear in Europe as well, founded by ex-Tesla executives. Gilles Normand, Renault’s senior vice president for electric vehicles shared:

“We have two curves. One is EV technology cost reductions because there are more breakthroughs in the cost of technology and more volume, so the cost of EVs will go down. ICE going to go up as a result of more stringent regulations especially regarding to particulate regulations.”

Source: Bloomberg

Category: General

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27 responses to "Electric Cars To Cost Less Than Gas Counterparts Within One Decade"
  1. KS says:

    Yes, my goal is 2020 before I even consider an EV, maybe later if gas stays cheap. I paid $1.23 last fill up thanks to Kroger points and of course used 35 gallons.

    1. Brandon says:

      If you look at the chart in the Bloomberg article, it’s saying this: now in 2017 an EV sells for $41k, and by 2025 it will be $30k.

      There you have it in a nutshell!!

      1. SJC says:

        As tax credits reduce we will see the prices for EVs come down, subsidies distort markets.

  2. leafowner says:

    There are so many other things to take into account…..I just spent several hundred dollars to replace filters and fluids in one of my ICE cars. I spend ZERO on maintenance on my Nissan Leaf.

    1. BillT says:

      You are correct but people aren’t generally good with “total cost” calculations. This is one of the reason why some people will rent a storage unit for $200 / month for years on end to store $500 worth of stuff.

  3. MEroller says:

    Insideevs wrote: “Tesla has its own Gigafactory, which is driving battery prices down, and the company plans to build several additional battery factories. Daimler has already broken ground on a similar battery factory in Europe, …”
    The big difference between Tesla’s Gigafactory in Nevada and the extension of Daimler’s battery factory in Kamenz is that Panasonic is manufacturing the cells for Tesla’s batteries on site at the Gigafactory, while in Kamenz operations will be limited to battery confectioning only. They will still buy their cells from elsewhere.

    1. What’s ‘battery “confectioning?”‘

      Is that not something to do with Sugar? I have been to a “confectionery”, but not to get batteries!

    2. Pushmi-Pullyu says:

      “Daimler’s battery factory… will be limited to battery confectioning only”

      I’ve never heard of “battery confectioning”; is that a thing? 😉

      But it’s definitely ridiculous to try to label Daimler’s forthcoming battery pack assembly plant a “Gigafactory”, as though it will rival Tesla’s Gigafactory 1, when Daimler won’t be making any battery cells there at all.

  4. Nix says:

    Along with the list of comparison factors that were at the beginning of this story, another factor is the wide range of ICE engine/transmission/drivetrain/exhaust system costs.

    It will take longer to get to price parity with a small normally aspirated 4-cyl FWD non-performance engine than it will to compete in price with a car with twin-turbo V8 engine, 7-speed dual-clutch transmission, torque-vectoring AWD, with dual exhaust. An ICE drivetrain like that gets pretty expensive quite quickly.

    Folks waiting for an EV that competes with a Nissan Versa will have to wait longer than folks who want to replace their BMW or Audi with a similar performance EV.

    1. darth says:

      True but those high performance vehicles are also the highest profit margin ones. Once their sales start getting eaten, as Tesla is already doing to large luxury sedans, it will be painful for any car company who doesn’t have an EV to compete.

    2. menorman says:

      The Versa is definitely the benchmark for the Leaf because they’re pretty similar. Some dealers advertise entry-level Versas for $10k, so that’s the price to meet for the Leaf.

      1. Nick says:

        The Versa is much worse than the LEAF. It drives very poorly.

        1. BenG says:

          The Versa is a worse car than the Leaf in many ways, but the Versa still has huge quick refill and range advantages over even the upcoming second generation Leaf. It will almost certainly still have a huge quick refill and range advantage over the 3rd generation Leaf that will be on the market in 2025, though maybe by then the national quick-charge network will be widespread so that long-range travel will not be an imposition – still that is a huge project to be done.

          ICE and hybrid technology will both be improving over the years too, so a hypothetical bottom end mild-hybrid Versa available in 2025 will have a much more advanced powertrain than the current offering, one that offers a significantly improved cost/performance/efficiency package than available now.

  5. Joe says:

    What is interesting is when sticker price will be the same including subsidies?

  6. jim stack says:

    Electrics are already cheaper but most people don’t think in terms of life cycle costs. You save $5-10K over a typical 10 year ownership. As gas goes up others will notice and start adding the numbers.

    1. Bacardi says:

      The only possibility of saving that kind of money could be a BMW i3 vs a 2/3 series ICE…A Bolt EV vs an ICE Sonic hatchback? Is cheaper upfront, annual registration and monthly insurance will also be less expensive…We also can’t forget that your spend more on gas, if you’re an EV exclusive household, you may need to rely on destination chargers occasionally, many have stated with DCFC that there’s a $5.95 connect fee and overpriced kWhs…Even worse, some have time limits which forces another $5.95 if you need more charge…

  7. DC says:

    How about deciding not buy one at all. Without Tesla I would have surely bought a premium ICE by 2020, now will not buy a car at all and use the tesla network.

    Fairly sure this view for a person living in a big city is not rare. The total number of purchased cars in western big cities will plummet, hurting the resale value of an ICE car and making Tesla network capable cars even more attractive

  8. So how long before a person doing an EV Conversion, can do it for less $, using their Own 7 Year Old ICE, and buying the parts (Motor, Controller, Batteries, E-Throttle, etc.), and get a 200 Mile Range EV, for less than buying a New EV, and trading off their ICE Vehicle? (Remaing a 1 Vehicle, EV Only, family!)

    1. For that matter: Even targeting a 107 Mile Range RV Conversion, versus getting a new 2016 LEAF?

      1. BenG says:

        Parts and labor will probably make this too expensive to be practical for most people who will not want to invest thousands into a 7 year old car. Most ICE vehicles will be driven to the end of their natural life, then be scrapped like they are now.

    2. Pushmi-Pullyu says:

      There are already articles to be found in the internet on how to do that, if you’re willing to settle for a conversion EV powered by lead-acid batteries and a low-efficiency DC motor. Their advice is to befriend the guy at your local golf course who maintains the golf carts, to persuade him to give you the deep-cycle lead-acid batteries at the end of their normal lifespan. (And don’t ask me why anyone would want to use worn-out lead-acid batteries to power their car, even if they’re free. I didn’t write those articles!)

      It’s a trade-off in time vs. money. The more time you’re willing to spend scrounging for low-cost or free stuff, the less you’ll spend.

      But conversion cars will never be a significant percentage of the car market, either new or used. The number of people with the skill set plus the well-equipped garage, plus the free time needed to successfully bring such a project to completion, will always be a very small percentage of the population.

  9. Rightofthepeople says:

    Insideevs said “Since batteries can account for up to about 50 percent of the cost of an EV, the impact of cheaper batteries will be substantial.”

    Maybe in 2011, but today I don’t think the batteries are 50% of the cost. Just look at the Bolt. We know Chevy pays LG $145 per kWh. Granted that is cell cost but let’s just say pack cost is $200 per kWh. That means for the 60 kWh pack the cost is $12k for the Bolt battery. If that is 50% of the overall cost then the Bolt “only” costs GM $24k to produce, and at an MSRP of $37k that would give GM a huge gross margin. My conclusion is that battery cost is now down to something in the neighborhood of one third or maybe 40% of the total cost of an EV. Now the good news is that battery costs should continue to come down along with other costs associated with producing EVs so they will become more affordable over the next 5 to 10 years.

    1. Marko says:

      usually the true costs for a production of normal car is 1/3 of the street price. The rest is amortization of development costs, marketing, dealer commissions,…
      Traditional car makers have similar calculation with EVs that’s why Renault Clio is half price of the Renault Zoe without the batteries. Tesla took the different path-direct sales.

  10. Steven says:

    I think the problem is that the average person looks at the granularity on a daily level, “How much does it cost me today” plus the occasional “major servicing and or repairs”, as opposed to the total life cycle, and can’t get past the imagined hurdle that a BEV “costs more”.

    Well sure, it does on the day you buy it, but the numbers don’t lie. Even with a below average commute to and from work, the BEV will in time cost less. The only real variables are how soon, and that depends on how far you drive and how frequently.

    The only trick is to buy an EV with just enough range to cover your real needs. Otherwise you’re buying too much range, and as of now, range costs money.

    1. Pushmi-Pullyu says:

      Steven said:

      “The only trick is to buy an EV with just enough range to cover your real needs. Otherwise you’re buying too much range, and as of now, range costs money.”

      Wow, that’s mighty poor advice. Is it safe to assume you don’t actually use an EV as your daily driver? Or if you do, that you have owned it for less than a year?

      Here’s better advice: Buy an EV that has, at a minimum, 30% more EPA rated range than you think you’ll ever need for your daily driving needs. That allows some “margin for error” for reduced range on cold days, for unplanned side trips, and for a bit of degradation of the battery pack over the years. Not to mention less stress from range anxiety due to the pack getting down to just a few miles when you’re approaching home.

      Those who live in mild climates (southern California, Florida) may be able to get away with a slightly smaller safety margin, due to no bitterly cold winter days and nights. But even there, you’ll want some safety margin, to allow for loss of range over the years if nothing else.

      A bigger battery pack is never a waste. You can always use more range for those unplanned side trips, and so you can continue to drive the car even if you forgot to charge it yesterday. Also, a bigger battery pack allows faster en-route charging at an EV fast charger. Not to mention the fact that the bigger the battery pack, the slower it loses range, and therefore the better the resale value will be.

      There are a great number of advantages to having a battery pack bigger than the absolute minimum you think you need. There is one and only one advantage to a smaller pack: It’s cheaper. Is that real savings, or is it being “Penny wise and pound foolish”?

  11. BenG says:

    I look at the cost parity issue as being a curve dictated by price of the car. Tesla is already at price parity for ~$80,000+ cars and SUVs. They aim to be at parity for $35,000+ cars in the near future.

    It will be while though before battery vehicles approach the utilitarian functionality of low end cars where the range and fast-refill of an economy ICE (perhaps with mild hybridization to improve efficiency) will be untouched by comparably priced BEVs for quite a while.

    1. Pushmi-Pullyu says:

      That’s right, and thanks. EVs reaching sticker price parity with gasmobiles won’t happen on any specific date. Tesla has already achieved price parity in the “premium sedan” and “small SUV” market segments. EVs in lower priced market segments will achieve parity over time.

      The answer to the “when?” question is not a point on a one-dimensional timeline, but rather a two-dimensional graph of sticker price vs. time.