Volkswagen e-Golf recharging at curbside Autolib station, Paris, Sep 2016
With the prospect of multiple long-range electric cars hitting the market over the next few years, the prediction market is in full swing.
Battery costs have fallen faster than predicted eight years ago, and virtually every carmaker plans to introduce at least one battery-electric vehicle with 200 miles of range or more.
The Chevrolet Bolt EV, rated at 238 miles, is the first of those; the Tesla Model 3 is expected to follow before the end of this year, in unknown volumes.
Last week, we got our first estimates of the production costs of those two vehicles, in a detailed analysis.
That came from a report issued by the investment firm UBS, which is worth reading in its entirety to understand the company's methods and reasoning.
But another part of the report was equally significant for the future competitiveness of battery-electric cars: it suggested that they will soon reach cost parity with conventional gasoline and diesel cars in Europe.
nd, it says, that might happen as early as next year.
The prediction was highlighted last week in an article by the British Financial Times (subscription required), which focused on a coming "inflection of demand" for battery-electric cars following its Bolt EV teardown.
Note that cost parity, which factors in not only purchase price but also running costs, differs from straight price parity, which is an equal price on the showroom floor for similarly sized and equipped vehicles with gasoline and long-range all-electric powertrains.
Following its teardowns and cost projection, UBS has boosted its estimates of global sales for plug-in electric vehicles by 50 percent over its previous analysis.
It now suggests that 14 percent of vehicles sold globally by 2025—which will total 100 million, plus or minus—will be electrified.
The big number comes in its projection of European sales, however: it says fully one in three new cars sold will be battery-electric or plug-in hybrid.
In general, electricity is more expensive in European countries than it is in the U.S., where 1 kilowatt-hour costs 12 cents on average across the country but individual utilities can charge from 3 cents to more than 40 cents per kwh.
Fuel is also vastly more expensive, and national registration fees based on carbon emissions vehicle value can also be much higher than in the U.S.
Some U.S. electric-car owners already claim their total cost of ownership for a mass-market electric car is considerably lower than for a comparable gasoline car, especially in areas that combine state or local purchase incentives with low electricity prices.
The challenge, of course, is that retail car buyers chronically overweight the purchase price (or monthly payment) and undervalue total cost of ownership.
But as battery prices continue to fall and automakers conclude they must subsidize early plug-in electric vehicles to meet national and California regulations, the picture will likely improve steadily over the next few years.
And that's assuming gasoline prices stay at their current, relatively low levels.