Electric cars hit roadblock on path to cost equality

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【Summary】Electric cars are projected to become cheaper than fossil fuel vehicles within the next few years, according to a report by the University of Exeter. The study suggests that price parity for electric vehicles could be achieved in Europe within one year, in China within two years, and in the US within three years. The timeline could be accelerated with government subsidies.

FutureCar Staff Sep 19, 2023 9:28 AM PT

Electric cars hit roadblock on path to cost equality

Electric cars are rapidly becoming more affordable than petrol vehicles. According to a report from the University of Exeter, battery-electric vehicles could reach price parity with fossil fuel equivalents in as little as one year in Europe, two years in China, and three years for medium-sized cars in the US. The researchers also noted that this timeline could be accelerated if governments provide subsidies for potential buyers.

However, this news may not be well-received by Australian drivers. The report comes shortly after the NSW government announced plans to eliminate a $3,000 subsidy on electric vehicles, following in the footsteps of the Victorian government's decision to do the same months earlier.

The analysis, conducted by the Rocky Mountain Institute and Bezos Earth Fund, included forecasts based on electric vehicle adoption in Europe, the US, China, India, and Japan. It revealed that electric cars have already become more cost-effective to own and use than petrol and diesel cars in Europe and China. The US is projected to follow suit by 2024 or 2025.

Furthermore, the study predicted that a second tipping point, where electric vehicle prices equal those of petrol and diesel cars, would be reached in all three regions by 2026 for small and medium-sized cars. India is expected to achieve electric car price parity by 2027, while Japan is projected to reach it by 2030 due to strong hybrid vehicle sales.

It is important to note that these forecasts do not take into account electric vehicle subsidies. The report emphasizes that "the tipping point for the consumer will be even earlier where governments provide them."

To further encourage the transition to low-emission transport, the lead researcher suggested that governments implement policies such as deadlines for petrol car sales, road taxes, and the construction of more charging stations. These initiatives, along with zero-emission vehicle mandates, investment in charging infrastructure, purchase incentives, and battery-recycling standards, can help accelerate the adoption of low-cost, zero-emission, sustainable road transport.

Unfortunately, the NSW government is anticipated to eliminate the $3,000 rebate for new electric vehicle purchases and stamp duty exceptions in its upcoming budget. Premier Chris Minns cited advice indicating that these incentives could increase vehicle prices. The Victorian government also terminated its $3,000 electric car rebate in June.

Behyad Jafari, the CEO of the Electric Vehicle Council, expressed concern over the removal of these rebates, as they have played a significant role in driving the uptake of low-emission cars in Australia. Jafari urged politicians from various parties to oppose this decision, emphasizing that fewer electric vehicles would lead to dirtier air, continued reliance on foreign oil imports, higher carbon emissions, and increased financial pressure on households.

Despite these setbacks, several other states and territories in Australia, including Queensland, Western Australia, South Australia, and the ACT, continue to offer incentives for electric vehicles.

Australian Associated Press