2025 could see a further electric boom for the everyday EV, with several sources claiming a significant drop in electric vehicle battery costs
How cheap can electric vehicles be, and will they reach price parity with combustion cars quicker than expected?
According to ABC News, there could be a pretty significant drop in the cost of batteries in 2025 when compared to 2022 figures.
The Australian media outlet has reported on global investment bank Goldman Sachs’ predictions that prices for batteries will continue to fall by as much as 40 percent by 2025.
According to Reuters, the battery of an electric car currently equates to roughly 40 percent of the total price of the vehicle.
The Tesla Model 3, for instance, has a battery worth roughly $16,000 to $20,000 depending on sources, but a 40 percent drop could mean batteries come in at an estimated $10,000.
As of January 2024, the most affordable internal combustion vehicle on sale is the Kia Picanto small car that starts from $17,890 before on-road costs.
That’s $21,000 lower in outlay than the cheapest EV, the BYD Dolphin.
Although purely speculation, with the sheer volume of EV batteries now being produced, cheaper material costs, rapid-fire battery innovations and plenty of global demand, we could potentially see price parity between ICE and EV cars by around 2028. Maybe.
The BYD Dolphin currently starts from $38,890 before on-road costs, while the MG4 in base Excite 51 guise has recently seen a small $1000 price rise, and now starts from $39,990 before on-road costs.
But is that the cheapest we will see electric vehicles? It’s unlikely.
It’s hard to tell at such an early stage how affordable EVs will become in the coming years, however the introduction of more EVs from competitive Chinese brands is almost certain.
EV giant Tesla will eventually launch its more budget-focused Model 2 hatch. We’ve seen teasers and some faint information regarding this vehicle, but it is still yet to be confirmed. Crucially, it is also yet to be confirmed for the Australian right-hand drive market.
Pricing for the Model 2 could start around the $40,000 range, considering it will easily find itself pressured by key Chinese automakers like MG and BYD.
Accurate as of January 2024, these prices are before on-road costs.
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