Inside clean energy: How soon will an EV cost the same as a gasoline vehicle? Sooner than you think


At some point, probably sooner than you expect, the price of an all-electric vehicle will fall far enough to equal the cost of an equivalent gasoline vehicle.

We know that day is coming and a whole lot of people—many of whom work in the auto industry—would like to know when.

So here’s an answer: Maybe by 2023, probably by 2024 and almost definitely by 2025.

That’s according to Venkat Viswanathan and his team of researchers at Carnegie Mellon University in Pittsburgh. They developed a model to calculate the costs of EV batteries that breaks down the costs of each component and then predicts changes over time.

“There will definitely be cars, passenger vehicles, in multiple segments where the EV option is the cheaper option,” Viswanathan said about the 2025 timeframe.

When we talk about the cost of EVs, we’re mainly talking about the cost of batteries, which are the most expensive components in the vehicle, and also the ones for which the costs are changing most quickly.

Analysts and researchers have said for years that a battery price of $100 per kilowatt-hour is the point at which EVs become cost-competitive with gasoline vehicles. Last year, the global average price was down to $156 per kilowatt-hour, according to BloombergNEF.

But the model developed by Viswanathan and his colleagues shows that battery packs are on track to cost less than $80 per kilowatt-hour by 2025, a projection in line with leading forecasts, like that from BloombergNEF (You can read more about their model in a 2017 journal article and in a recent post on The Conversation).

Now that the below-$100 benchmark is within sight, it’s important to specify what it means. It doesn’t mean that I can go out and buy an EV of any size and it will cost the same or less than it would for a gasoline model with similar features. But it probably does mean that I will be able to get a compact sedan EV for about the same cost and with similar features as one that runs on gasoline.

Viswanathan said cost parity will arrive first for small sedans that now sell for $30,000 or less. It will take longer for automakers to develop electric trucks and SUVs that cost about the same as similar gasoline models.

One of the big reasons we will need to wait longer for larger vehicles is that trucks and SUVs need a lot of power for towing capacity, which means larger battery packs and higher costs.

The fact that EVs will be cost-competitive should help to transform a market in which less than 2 percent of new vehicles sold are all-electric.

This change is coming, and it’s coming fast, and that’s good news for the climate because transportation is responsible for more than a quarter of U.S. emissions.

Electric Trucks Are Coming, with Chevy Entering the Fray

Most of the EVs on the market today are sedans, even though U.S. consumers prefer, by a wide margin, crossovers, trucks and SUVs. 

Automakers know that for EVs to truly reach the mainstream, there will need to be attractive options in all of those classes, which is why several of the biggest players are racing to develop all-electric pickups.

General Motors said last week that it will begin selling an all-electric Chevrolet pickup by 2025. This will follow the company’s release of the GMC Hummer EV, a pickup that could go on sale as soon as next year.

Those models will be part of a competitive landscape that also includes the Ford F-150 EV, the Tesla Cybertruck and the Rivian R1T, all of which are heading for rollouts over the next two years.

Stephanie Brinley, an auto analyst for IHS Markit, told me that automakers are developing electric trucks not because they expect to sell a lot of them in the near future, but because they need to have strong electric options across their lineups in the long run.

“You can’t wait until 2040 and go, ‘Oh, now we’ll just drop the battery in here,'” she said. “The vehicle needs are too complicated, so you have to start developing it much earlier.”

Her company is projecting that all-electric trucks will be 0.87 percent of U.S. sales of cars and light trucks in 2025, and that EVs in general will be about 8 percent of sales.

One of the big questions about electric trucks is which regions will emerge as centers of customer demand. Brinley said she is looking to Texas as a possibility because the state is the leading market for pickup trucks. California is also likely to have a big role to play, she said.

But even in those places that have demand for electric trucks, that demand is likely to be low.

“We’re really in baby stages,” Brinley said of building the foundation of the market to come. “It’s not about how many you sell in 2024. It’s about how many you sell in 2035.”

Federal Review of Vineyard Wind Isn’t Moving Quickly, But It’s Moving

Monday was the deadline for interested parties to comment in the federal government’s long-delayed process of reviewing whether to approve a permit for Vineyard Wind 1 off of the Massachusetts coast, which, at 800 megawatts, would be the first giant-size offshore wind farm in the country.

The new round of comments includes a lot of talk about “transit lanes” for fishing boats. But before I get to to that, some background:

The companies behind Vineyard Wind 1 had hoped to begin construction last year, but President Trump’s Bureau of Ocean Energy Management dashed those plans last summer by taking the unusual step of pausing and expanding the process of reviewing the environmental implications of the project.

Last month, the bureau issued a long-awaited supplement to the project’s draft environmental impact statement, which some see as a sign of forward progress. The bureau’s current timetable calls for a decision before the end of the year.

But this new document includes a potential redesign of the project layout suggested by a fishing industry group. This alternative design would require a “transit lane” of up to four miles that would go through the project area and could not have any wind turbines. The project’s developers and clean energy industry groups say that doesn’t make sense.

In this latest round of comments, renewable energy industry groups are highlighting the economic benefits of offshore wind and saying that the transit lane proposal is unnecessary.

On the other side, fishing industry groups, including the one that suggested the transit lane, Responsible Offshore Development Alliance, continued to raise concerns that the process has not adequately accounted for the potential harm to fishing and other industries dependent on the ocean.

I asked Brandon Burke, director of policy and outreach at the Business Network for Offshore Wind, to help me understand where things stand.

He said that the transit lanes proposal is not a “poison pill,” but that it would harm the project by reducing the amount of space available for turbines, which would reduce the amount of electricity that could be generated.

This is bigger than just Vineyard Wind 1, he said, because the fishing industry group is asking for transit lanes that would extend through many other potential offshore wind projects in the area.

Whenever I write about Vineyard Wind 1, it’s important to take a few steps back to explain why this is so important. The country now has two offshore wind farms in operation, off the coasts of Rhode Island and Virginia, that have a capacity of 30 megawatts and 12 megawatts, respectively.

Vineyard Wind 1 would be the first offshore wind project in the United States to operate on a much larger scale. Once it is up and running, there are many other proposed projects that could follow and are in various stages of planning all along the East Coast, with discussions underway for the West Coast, as well.

If Vineyard Wind 1 is delayed and modified so much that it turns into a nightmare for all involved, that would be a bad omen for the entire offshore wind industry.

But the federal review also could be a good thing if it helps the government learn how to effectively handle other large offshore projects, and helps developers figure out how they can craft proposals in ways that will minimize delays.

I’ll continue to follow this and let you know what happens., 30 July 2020
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