Are electric cars getting cheaper?

Electric cars may be relatively expensive now, but various experts have predicted that prices will fall in the next few years. 2024 will see electric cars as cheap as petrol and diesel powered vehicles.

According to a report by Bloomberg New Energy Finance (BNEF), there’s a strong chance that electric cars will be cheaper than fossil-fuelled cars by as soon as 2025. Some models set to cost the same as combustion engines by 2024, providing battery pack prices continue to fall. 

At present, 37% of the cost of an electric car is represented by the battery. The Bloomberg report perceives the cost of these batteries to drop to 24% of the price of an electric car in 2024. And, as prices are already down from 49% two years ago, this prediction is heading the right way.

Electric cars to fall to the same level as petrol-powered vehicles in 2018

Last year, UBS Investment Bank revealed analysis that no doubt shocked the automotive industry: that the price of an average electric vehicle would fall to the same level as petrol-powered vehicles in 2018. 

The prediction was made after USB Investment Bank’s “evidence lab” section examined the economics of electric vehicles by tearing apart a current generation electric car. They discovered that the construction price of electric vehicles was much lower than previously thought, but that there is still the potential to make them cheaper. 

Consequently, UBS Investment Bank made a prediction that the “total cost of consumer ownership can reach parity with combustion engines from 2018”, with this likely to happen in Europe first. 

On the contrary, one of Nissan’s most senior executives has recently predicted that electric cars will remain more expensive than petrol or diesel cars until the middle of the next decade. Only time will tell. 

The cost of Li-ion battery packs for electric vehicles are falling

A paper published in Nature Climate Change revealed that Li-ion battery packs for electric vehicles are falling in price. 

The research indicates that between 2007 and 2014, production costs of these battery packs have significantly dropped to lower price points than previous forecasts had expected. If these prices continue to fall, electric vehicle battery packs could compete more effectively against gas cars and backup generators pretty soon.

So, will electric cars continue to fall in price? According to these studies, it looks promising. Watch this space.

Potentially lower running costs

The entry price isn’t the whole story when it comes to car cost. Running costs add up.

For most drivers, going green can save money. 

Our journey cost calculator can show you how much EV vehicles could save you on your daily commute.

Find out more about eco driving

For further information on electric and hybrid cars, take a look at our myth-busting eco-driving hub. 

If you’re considering purchasing a new hybrid model, use our eco-friendly car comparison tool to see which cars are right for the environment, and right for you. And you can get an Electric Car Insurance quote from Admiral.