Automakers and the media have been telling us for years that EVs are going to get cheaper as battery prices come down and ramped-up manufacturing leads to economies of scale. These points are likely true, and they'll probably happen over time, but the COVID-19 pandemic, chip shortage, and skyrocketing gas prices have boosted the demand for EVs, which has caused the opposite – rising prices – at least for the time being.
With that said, Volvo CEO Jim Rowan believes that EVs are going to reach price parity with their gas-powered cousins as soon as 2025. Obviously, there are many variables at stake here. If we're still in the midst of a global financial disaster and gas prices remain super high, Rowan's optimistic estimate could change.
Regardless, the CEO of a luxury car company that's "all in" about an EV future is willing to say electric cars and SUVs will cost about the same as today's ICE equivalents in just two to three years. Rowan also went so far as to say that companies shouldn't be relying on government subsidies for success. They have to find a way to produce EVs that people want and can afford.
According to Automotive News Europe, the CEO shared at a recent event in Stockholm, Sweden:
"We think we get [to price parity] ... around 2025, where there'll be enough technology that's driving down cost on the battery. Technology will drive range up. Less batteries, but more range, at less cost — we'll get there."
Gallery: Volvo EX90
As you can see from Rowan's comments, rather than talking about battery prices coming down in general, he's citing the need for fewer batteries for adequate driving range thanks to advancements in technology. Since batteries are the most expensive part of an EV, this makes plenty of sense, though it doesn't account for automakers and dealers pricing electric cars higher than they should.
Volvo just officially revealed its EX90 three-row seven-seat midsize electric SUV, which will serve as a replacement for the current XC90. During the reveal, it also teased a smaller electric crossover. Volvo currently offers both the XC40 Recharge and C40 Recharge electric crossovers, and almost all of its models are available in various plug-in hybrid electric vehicle (PHEV) configurations.
Rowan also referenced a "city car" style crossover that Volvo will reveal in 2023. Smaller EVs should also help Volvo sell in higher volume and reduce prices. Chances are, the crossover Rowan was referring to is the one Volvo teased with the EX90 at the recent reveal event.
To give you an idea about how far prices need to shift, the current 2022 Volvo XC90 starts at just over $50,000, though it can set you back well over $70,000 if you load it up. The upcoming EX90 will cost less than $80,000 in a well-equipped configuration.
It's also important to note that the electric version may be available for a tax credit of up to $7,500, depending on how everything works out with the Biden Administration's Inflation Reduction Act, which makes major changes to how the credit works. Rowan also added that the smaller SUVs will almost certainly benefit from the future credit. He said:
"We'll benefit [from the Inflation Reduction Act] when we get to the smaller SUVs that we'll bring."