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Electric cars will equal the production price of conventional cars by 2024

The cost of producing electric vehicles will equal the cost of producing cars on internal combustion engines (ICEs) by 2024, analysts at the largest Swiss financial holding UBS believe. After that, the abandonment of transport based on fossil fuels will become inevitable, say the researchers, cited by The Guardian.

According to experts, the difference in the production cost of electric cars and ICE cars by 2022 will be only $1900 per unit, and by 2024 it will disappear completely. Swiss analyst research is based on a recent analysis of the EV battery industry by the seven largest suppliers of electric vehicle batteries. According to experts, achieving parity in the production of components for electric vehicles and internal combustion engines is a key factor that will force the world to move away from the use of fossil fuels.

For now, major automakers are reluctant to make their lucrative ICE-powered car models due to the high cost of batteries, which are mainly produced by East Asian companies such as LG Chem (South Korea), Panasonic (Japan), and CATL (China). It is noted that the cost of the battery itself can reach a quarter or at least 1/5 of the cost of the entire electric vehicle.

USB analysts predict that by 2022 the cost of manufacturing batteries will drop to $100 per 1 kWh of capacity. Experts argue that those automakers that will try to maintain the level of sales of cars based on traditional internal combustion engines risk being left behind by more promising and progressive companies such as Tesla and Volkswagen. The latter, for example, is the largest automaker in the world in terms of the number of cars produced per year and has already announced its desire to invest about 33 billion euros in sales of electric vehicles.

“After 2025, there will be no reason to buy an ICE car,” said Tim Bush, an analyst at UBS.

He also added that not only electric vehicles but also hybrid models that combine the use of internal combustion engines and batteries will benefit from the reduction in the cost of battery production.

The cost of electric vehicles still significantly exceeds the cost of conventional versions, which limits their sales. For example, the new Volkswagen Golf starts at ВЈ20,280. In turn, the price for the electric model Volkswagen ID.3, positioned as the first mass-produced electric car of the German automaker, starts at 30,000 British pounds. Jaguar Land Rover, the largest British carmaker, estimates its only all-electric car at 64,495 British pounds, even after taking into account all government support programs aimed at increasing demand for electric vehicles. The cost of an analog of the Jaguar F-Pace based on the internal combustion engine, in turn, starts at 44,845 British pounds.

Experts believe that the rapid decline in battery costs will lead to a much faster transition to electric vehicles. It is noted that despite the coronavirus pandemic, there is already an increasing demand for this type of transport in Europe and China.

Independent auto analyst Matthias Schmidt predicts 11 million vehicles will be sold in Europe by the end of 2020, with a million of those sales coming from EVs and hybrid models. Experts from USB, in turn, predict that by 2025, 17% of the global automotive market will be electric vehicles. By 2030, this figure will already be 40%.

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