Prices likely to rise...
Electric cars ‘may be unaffordable’ to some motorists
Tesla in Edinburgh: despite a growing sector the company has cut jobs (pic: Terry Murden DB MediaServices)
Battery electric vehicles (BEV) are expected to cost the same as their petrol or diesel equivalents within the next five years, according to new analysis, while one manufacturer says that they will be unaffordable to some consumers.
Research from Deloitte points to a narrowing in prices and predicts that by 2024, the cost of owning a BEV will be on par with that of a petrol or diesel vehicle, which could boost demand.
However, Volkswagen chairman Hans-Dieter Poetsch said in an interview that investment in electric vehicles will make all cars significantly more expensive. That means electric cars may become unaffordable for people on low incomes, he told a German newspaper.
“The current price level cannot stay the same if these cars are equipped with electric motors,” said Poetsch. “Therefore, it will inevitably lead to significant price increases in the small car segment.”
More than two million electric vehicles were sold last year for the first time – twice the number in 2017 – even though they tend to be pricier than petrol versions.
Sales are rising on the back of government subsidies, technological advances and government targets to replace petrol and diesel with electric modes of transport.
Michael Woodward, UK automotive partner at Deloitte, said the tipping point for matching prices could be reached as early as 2021.
He said: “From this point, cost will no longer be a barrier to purchase, and owning an EV will become a realistic, viable option for new buyers.”
Pure electric cars already cost less to run over four years than petrol or diesel cars, according to researchers at Leeds University.
Manufacturers are now pursuing aggressive strategies to switch into the electric market. At last week’s Detroit Auto Show Ford said it would invest $11bn (£8.5bn) by 2020 to create a line of 40 hybrid and fully electric cars. General Motors said it is working towards a fully electric future and that Cadillac will be the brand to lead the charge. Cadillac president Steve Carlisle said new designs allow battery packs to fit into the car, the way “ice cubes fit into a tray”.
However, Deloitte’s research also suggests that the number of manufacturers is unsustainable. It is predicted that an additional 21 million electric vehicles will be on the road globally over the next decade, but supply is exceeding demand.
“Whilst there is a distinct trend developing in the EV market, the story is not a clear cut one. As manufacturers increase their capacity, our projections suggest that supply will vastly outweigh consumer demand by approximately 14 million units over the next decade.”
Tesla, coming off a strong 2018, has just announced it is laying off 7% of its full-time staff and making other cuts to rein in costs.
Its shares plunged 13% on Friday, the biggest decline since September when the Securities and Exchange Commission announced that it would be suing Elon Musk over his comments about taking firm private.
Despite recent falls in the stock, shareholders have been rewarded for gambling on the electric car-maker and its enigmatic CEO.
The stock debuted at $17 and is now trading at over $300. Anyone who invested $1 million in the IPO would find their stake is now worth about $17.8m.