We always heard that UBS was a bank, but it is way more versatile than we could imagine. The company has an arm called UBS Evidence Lab that is a team of experts working “across 55 specialized labs” and willing to provide data for investment decisions. These guys went after electric cars and believe they will reach production costs parity with combustion-engined vehicles by 2024. And this is just the beginning of excellent news.
If you think that this cost parity needs the $100/kWh magic number to be achieved, think again. According to the UBS Evidence Lab analysts, that will happen in 2022 or even sooner: by 2021. Yet, we will have to wait at least two more years for EVs to cost the same to produce as cars that burn fuel.
The interesting part of the report is that the magic number represents savings of $1,000 to $1,500 per car. That’s a lot of money – especially for companies that produce thousands or millions of them – but the total gap will still be around $1,900 in 2022. Luckily, as you already know, it will take only two years for the costs to be exactly the same.
With these prices, UBS Evidence Lab projects that the market share for electric cars will be around 12 percent in the US by 2025. Europe and China will have similar shares: around 17 percent by 2025 and 40 percent by 2030.
UBS Evidence Lab used 12 analysts to reach these results. And they are not based solely on calculations but also on the teardown of seven major cells used in EVs with the help of P3 Automotive.
Of the seven batteries analyzed by UBS Evidence Lab, the one made by Panasonic and used by Tesla is still the best, but CATL’s NMC 811 batteries almost beat it. LG Energy Solution – the former LG Chem – took third place by a wide margin due to lower costs when compared to the fourth, SK Innovation.
According to the UBS Evidence Lab report, “Tesla continues to lead with the best overall powertrain technology,” but “the cost lead in battery cells is minor by now and will depend on its new proprietary cell design in the future.” In other words, it will need the 4680 format to succeed. LG Energy Solution is either working with Tesla on it or developing its own solution, which may threaten Tesla’s current lead.
The report is very rich and full of information. We will try to extract more information from it as soon as possible. Still, it also mentions that any automaker willing to be competitive has to adopt the same all-in now adopted by Volkswagen and Tesla since the very beginning.
Every other company willing to make a more gradual transition will be in the middle of the rope bridge when it gets cut. Goofy shows what follows right above.