Deloitte projects EV 'tipping point' when price parity with ICE vehicles is reached in 2024
New analysis by Deloitte forecasts that the cost of owning a battery electric vehicle (BEV) - without subsidy - will reach price parity with that of a petrol or diesel vehicle in 2024. If the £3,500 Plug-in Car Grant is maintained at its current level, price parity could be reached as early as 2021. Meanwhile, a separate Reuters analysis says that global car makers are planning to spend over $300bn on electric vehicles and related technology.
The Deloitte research forecasts that global EV adoption will rise from two million units in 2018, to four million in 2020, 12 million in 2025, and 21 million in 2030. By 2030, Battery Electric Vehicles (BEVs) will significantly outperform the rest of the EV market, accounting for 70% of total EV sales.
The report points to key factors in accelerating BEV uptake: growing consumer demand for greener vehicles, driven by financial incentives and growing regulation of the use of ICE vehicles, particularly in polluted urban areas.
The report says that while upfront purchase costs of EVs remain the biggest barrier for consumers, it reveals how, as technology improves, this and other consumer concerns will gradually ease over time.
Michael Woodward, UK automotive partner at Deloitte, said: “In 2018, we saw global EV sales surpass two million units for the first time; twice those sold in 2017. In the UK, 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.”
Deloitte's projections show that, based on the promised investments by car manufacturers, global EV production will reach 35 million vehicles by 2030; approaching half of current annual global demand.
The analysis projects a shake-out in the automotive industry as new entrants challenge incumbent players and as consumer demand for EVs is currently projected to be well below potential supply.
Meanwhile, separate research by Reuters finds that global car makers are planning an unprecedented level of spending to develop and procure batteries and electric vehicles over the next five to 10 years, with nearly half of their budgets targeted at China.
Reuters found that based on past promises, car makers plan to spend at least $300 billion on EVs, driven largely by environmental concerns and government policy, and supported by rapid technological advances that have improved battery cost, range and charging time. The accelerated rate of industry spending — much of it led by Germany’s Volkswagen, Reuters says — is greater than the economies of Egypt or Chile.
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