The price of a new electric car will drop to the same level as an equivalent new petrol or diesel model 'much faster than initially expected,' or so, a recent report claims.
This is because electric vehicles (EVs) will, on average be cheaper to make than cars with internal combustion engines by 2027, says the AA ‘s market research team.
Electric vehicles will be cheaper to produce than equivalent petrol and diesel cars by 2027, according to a new report. And it means EV prices are going to fall 'much faster than expected'
The price of electric vehicles (EVs) has been decreasing in recent years due to improvements in technology and manufacturing, as well as falling battery costs. And the price premium of an EV compared to an internal combustion engine (ICE) vehicle has dropped from around 50% in 2020 to around 40% in 2023. Some forecasts predict that some EVs could be around the same price as a petrol or diesel car by the end of the 2020s
One of the biggest hurdles facing EVs is their premium up-front price, which alongside concerns about a lacklustre public charging network and range anxiety has seen public demand for battery models drop significantly in recent months.
Of nearly 40,000 new electric cars registered in January and February 2024, just 6,500 were purchased by individuals.
Companies tempted to cut EV prices in the face of weak consumer demand and cheap competition from China could face a ‘race to the bottom’ ending in disaster for some brands. That’s the view news coming out of an industry luncheon in Milan back in June. It comes at a time when discounts on new electric cars have hit record levels in the UK market and used EV prices also continue to fall sharply.
It says the average discount on a new EV has now reached 10.6 percent, up from 4.8 percent a year ago, while 70 percent of new electric model trims saw average prices start to fall as far back as December 2023.
“Manufacturer and retailer discounts alone though are not enough to bridge the price gap and stimulate the levels of retail demand needed to convert the next cohort of buyers,” the report says. “In many cases, the average advertised price of a new electric car, including the manufacturer or retailer discount, is still higher than the petrol or diesel equivalent.”
If manufacturers continue to increase incentives on new EVs, the high depreciation on models is likely to worsen further, Autotrader points out.