Summary
- EV batteries cost $1,355 per kilowatt-hour in 2008, but are now nearing the goal of $80/kWh
- Total cost of EV ownership has been close to gas cars for years, with the balance tipping towards EVs for longer vehicle ownership durations
- Analysis from Goldman Sachs predicts average battery prices could reach $80/kWh by 2026, achieving ownership cost parity with gasoline cars
- EV battery costs are dropping due to technology improvements, space-saving methods, and lower costs of lithium, cobalt, and other metals
- Consolidation in the EV battery industry may stifle further innovation, but there are many reasons to buy an EV now, including incentives from automakers like Ford.
Article
The cost of EV batteries has been a major factor in the adoption of electric vehicles, with high upfront costs making it challenging for prospective buyers. However, a new analysis from Goldman Sachs suggests that the cost of EV batteries is on a downward trajectory, with prices expected to reach $80 per kilowatt-hour by 2026. This drop in battery prices will bring EV ownership cost parity with gasoline-fueled cars in the US, even without subsidies.
The total cost of ownership advantage for EVs has been evident for years, with factors such as fuel and maintenance savings tipping the balance in favor of electric vehicles. In a comparison between a Toyota Prius and a Chevy Volt, the plug-in hybrid Volt came out ahead in terms of cost savings over a five-year period. Despite the discontinuation of the Volt in 2019, its total cost of ownership benefits continue to be realized by owners.
While there are barriers to adoption, such as higher upfront costs and concerns about resale value, the ongoing decline in EV battery prices is expected to address these issues. However, there is a caution about potential consolidation in the EV battery industry, which could limit innovation and competition. Despite these challenges, the long-term outlook for EV adoption remains positive, with more consumers expected to shift towards electric vehicles by 2026.
Automakers are implementing strategies to incentivize EV adoption, such as offering free EV chargers and promoting home charging solutions. Personal stories from EV owners, highlighting the advantages of electric vehicles, play a significant role in encouraging others to make the switch. For example, a Ford Lightning EV owner shared how the vehicle has been a game-changer in their daily farm work, citing benefits such as power to get through the day without recharging and Pro Power On-Board for backup power during outages.
Overall, the declining cost of EV batteries, coupled with ongoing advancements in technology and the benefits of EV ownership, make it a compelling choice for consumers. The shift towards electric vehicles is gaining momentum, with the potential for EVs to achieve cost parity with traditional gasoline cars in the near future. As the industry continues to evolve and innovate, there are many reasons to consider purchasing an electric vehicle sooner rather than later.
Read the full article here
