Electric cars to see price parity with ICE models by 2029, claims study

The price gap between electric and internal combustion engine-propelled cars remains a major factor in consumer's decision-making process when choosing a new vehicle. While factors such as range anxiety, lack of electric vehicle charging infrastructure, and lack of model options compared to ICE vehicles have been playing their respective roles in such decision-making process, the significant price gaps between EVs and ICE vehicles is a major one that drives many buyers away from electric cars. However, the EVs are likely to see price parity with their fossil-fuel-powered counterparts by the end of this decade, claims a study by the International Council on Clean Transportation (ICCT).

A major reason behind the huge gap between the sticker price of electric cars and fossil fuel models is the high price of batteries and raw materials used to make them. However, with the increasing penetration of electric vehicles in the transportation sector and thanks to the subsidies and incentives offered by governments around the world, costs of battery packs are gradually plummeting, which is expected to bring parity in prices of EVs and ICE vehicles by 2029, forecasted the study.

Electric vehicles predominantly run on lithium-ion battery packs, which require critical raw materials such as lithium, nickel, manganese and graphite among others to be built and functional. Over the last few years, demand for lithium has skyrocketed so much that it is often termed white gold.

The growing concern around environmental pollution and vehicular emissions' impact on that has been driving the governments to increasingly emphasise on shift to electric mobility from petrol or diesel-powered vehicles. Consumers too are showing openness towards adopting the new cleaner powertrain technology, which is propelling the automakers to bring more electric vehicles into their portfolios. This rising demand has fuelled investment growth in higher extraction and refining of lithium and other necessary raw materials, as well as in battery manufacturing also, boosting the supply chain. This demand and supply dynamic is helping bring down the costs of battery packs, eventually resulting in electric cars being more affordable than before.

ICCT estimates that battery pack costs are expected to slump from $122/kWh in 2023 to about $91/kWh in 2027 and $67/kWh in 2032. This means an electric car with an average range of 483 km on a single charge would cost the same as an equivalent petrol-powered car by 2028-2029, claims the study.