The price of a lithium-ion battery pack, which is used to power an electrical vehicle, has dropped by 89% in the past 10 years. This may drop even further over the course of the next few years, and this is predicted to help automakers to mass manufacture electric vehicles for a similar cost as it does to make one that runs on petrol.
A decade ago, the cost of a lithium-ion battery pack was around $1110 per kilowatt-hour. That figure has now reduced to approximately $137 per kilowatt-hour.
“If you look at the remarkable cost reduction over the last decade, and what’s expected over the next few years, and pair that with escalating policy measures in Europe and expected in the U.S. and China, then you have this very powerful combination of factors to underpin EV uptake, starting now,” said the head of clean power at Bloomberg New Energy Finance, Logan Goldie-Scot to Fast Company.
“They will continue and accelerate over the next few years. Within four years, major automakers should be able to produce and sell mass-market electric vehicles at the same price and with the same margin as internal combustion engine equivalents.”
UBS’ Swiss Investment Bank believes that Volkswagen will be the first global automaker to make money off the sale of electric vehicles, with profit. It believes this will happen as soon as next year.
“In a head-to-head comparison, consumers would still prefer an electric Audi, BMW or Mercedes over a Tesla. The key issue is that these brands still lack competitive products, which could change in 2021,” UBS said.