EVs will be cheaper to produce than gas-powered cars within 3 years, market research firm says
Battery electric vehicles (BEV) will, on average, be less costly to produce than gas-powered cars by 2027, according to market research firm Gartner.
Gartner predicted in their report, published Thursday, that production costs will decrease much faster than the cost of batteries, which account for about 30-40 percent of the EV’s purchase price, according to the Environmental Defense Fund.
Pedro Pacheco, vice president of research at Gartner, said the firm reached this prediction in the wake of “new innovations that simplify production costs." These innovations include “centralized vehicle architecture” and the launch of gigacastings, which produce bigger aluminum parts and reduce manufacturing costs and assembly time.
"This means BEVs will reach [internal combustion engine] cost parity much faster than initially expected, but at the same time, it will make some repairs of BEVs considerably costlier,” Pacheco added.
The report also estimated that the average cost of an electric vehicle body and battery repairs from a serious accident will increase about 30 percent by 2027. Researchers noted this could make vehicles involved in accidents more susceptible to a total write-off, as the repairs could cost more than the residual cost.
Concerns have been raised in recent months about the high costs of EV repairs and the hidden costs that owners of electric vehicles might not necessarily understand when purchasing the cars.
The technology and computers used by EVs are a large contributor to the high costs, according to an investigation in January by KLAS in Las Vegas. KLAS is owned by Nexstar Media Group, which also owns The Hill.
Gartner also offered a stark prediction for some of the EV companies founded in the last decade. The firm expects 15 percent of companies formed in that time period to be acquired or go bankrupt by 2027, per the report.
“This does not mean the EV sector is crumbling," Pacheco said. "It is simply entering a new phase where companies with the best products and services will win over the remaining."
EVs have grown increasingly more popular in recent years, and Garner estimated EV shipments will reach 18.4 million units in 2024 and 20.6 million units in 2025.