Electric Cars Will Beat Older Cars on Cost Surprisingly Soon, Analysis Says

Electric cars could overtake gas-powered cars on cost in less than a decade’s time, an analysis published Monday reveals. Deloitte claims that the upfront purchase price of a battery-powered vehicle is among the largest stumbling blocks to adoption, but the analysis found that the cost of owning one of these cars could match their traditional counterparts globally by 2022.

It comes as part of a warming market for electric vehicles, which set new records by selling over two million last year. This figure is expected to reach four million in 2020, 12 million by 2025 and a staggering 21 million by 2030. The move will come as manufacturers like Tesla, Polestar and Volkswagen work to alleviate some of the biggest concerns about owning an electric car, including the cost. Deloitte’s Global Automotive Consumer Survey found 26 percent of Americans cited high prices as a major concern about electric vehicles, more than any other reason.

“In 2018, we saw global EV sales surpass two million units for the first time; twice those sold in 2017,” Michael Woodward, UK automotive partner at Deloitte, said in a statement. “In the U.K., the cost of petrol and diesel vehicle ownership will converge with electric over the next five years. Supported by existing government subsidies and technology advances, this tipping point could be reached as early as 2021. From this point, cost will no longer be a barrier to purchase, and owning an EV will become a realistic, viable option for new buyers.”

However, Deloitte also predicts that there will be an oversupply reaching 14 million vehicles by 2030 as manufacturers ramp up production, with Woodward warning that new production is “driving a wide expectation gap.” Tesla CEO Elon Musk suggested as much when he wrote on Twitter last week that it “seems like [there’s] a lot” of electric car startups:

“Those that can successfully build trust in their brand, ensure a positive customer experience from initial sale through to aftercare, and reflect consumer shifts towards the sharing economy in future business models will successfully navigate this,” Woodward said. “Equally, continual investment in engineering talent and the formation of partnerships with bespoke battery producers and third-party mechanic networks will also be important.”

Once electric cars reach cost parity, it may not be long before newer vehicles outstrip gas-based counterparts in terms of global sales. Musk predicted this month that “probably in 10 years, a majority of new cars made will be electric.” Morgan Stanley predicts traditional cars will become unprofitable by 2028, paving the way for electric car sales to overtake by 2038.

With Jaguar, Audi and Mercedes-Benz all poised to take on Tesla in terms of battery range and price this year, it seems the auto industry could shift sooner than skeptics may expect.

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