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Electric Cars Could Be Similarly Priced to Gas Cars in 2 Years

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【Summary】BloombergNEF’s annual report on battery prices claims that prices for EV battery packs will fall below $100 per kWh in 2023, which is when they’ll become similarly priced to gas-powered cars.

Original Vineeth Joel Patel    Dec 19, 2020 9:00 AM PT
Electric Cars Could Be Similarly Priced to Gas Cars in 2 Years

Pricing is one of the major drawbacks of electric vehicles. The average gas-powered vehicle in the U.S. is hovering around $38,000, while EVs are well above that. The main thing that makes EVs more expensive than gas-powered vehicles is their battery packs. They're packed with hard-to-find materials and the demand for EVs simply isn't there for automakers to increase battery supplies yet. With a few automakers, like Tesla and General Motors, running out of federal tax credits, expecting consumers to fork over the full price of EVs is a tough ask.

Cheap EVs Are Coming

Fortunately, for consumers that have been interested in EVs, but haven't made the switch yet because of how expensive they are, there's some good news. BloombergNEF's (New Energy Finance) annual report on battery prices found some interesting information. Lithium-ion battery packs were once $1,100 per kWh in 2010, but they've since fallen 89 percent to $137 per kWh in 2020. According to the company's latest forecast, the average price will get close to $100 per kWh by 2023.

Seeing that figure may not mean much, but experts believe that price would make them similarly priced to gas-powered cars. If automakers still have vehicles that are eligible for any amount of the federal tax credit, it would make them even more affordable. Though, we don't think many automakers will still have any credits available then.

The outlet reports that battery pack prices of less than $100 per kWh were reported this year for the first time. The batteries were found in electric buses in China, though the outlet claims that the actual volume-weighted average price for e-buses in the country was around $105 per kWh. While that's slightly higher, it's still below the volume-weighted average basis for BEV pack prices of $126 per kWh.

New Tech Is Key

BloombergNEF claims the price reductions they saw in 2020 came down to more EV sales, new battery pack designs, as well as larger order sizes. In the near future, updated cathode chemistries and falling manufacturing costs, according to the outlet, will see prices fall even further. While there are multiple ways for automakers to lower the prices of the battery packs in their vehicles, the outlet states that one of the more obvious paths is to use solid-state batteries.

Solid-state batteries would allow automakers and battery manufacturers to further reduce the prices of battery packs by reducing the amount of materials needed, as well as lowering the cost of production, equipment, and adoption of high-energy density cathodes, claims the report. A few automakers are looking into solid-state batteries for future products, so the technology could go mainstream within the next decade. BloombergNEF claims that solid-state batteries could be manufactured at 40 percent of the cost of current lithium-ion batteries.

Hearing that batteries are getting cheaper is a great thing for consumers. California is the first state to announce a ban on the sale of new gas-powered vehicles by 2035. Others will surely follow California's lead, which could mean that new gasoline-powered vehicles will only be available in a handful of states within the next few decades. Pretty soon, consumers may not have a choice on what type of new vehicle they can purchase.

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