October 22nd, 2020 by Steve Hanley
Remember 10 years ago when electric cars were a curiosity that only the bravest of early adopters would consider? My, how things have changed since then. Recently, California said it wants to ban cars with infernal combustion engines by 2035 (One firth of all new cars sold each year in America are sold in California). Now New Jersey says it thinks that is a pretty good idea and wants to follow suit.
“But wait,” we here you cry. “Electric cars are so much more expensive than cars with gasoline or diesel engines, only wealthy people will be able to afford them.” Middle class and low income people will be forced to search for 10 year old beaters on Craigslist for their cars. It’s Communism! It’s socialism? It’s government overreach! It’s an affront to the founding fathers and an insult to the memory of Voltaire, Locke, John Stuart Mill, and Henry David Thoreau!
You can argue with people until you are blue in the face about how electric cars are cheaper to own because electricity costs less than dino juice and EVs require little more than tires and windshield wipers during the first 5 years. But when it comes time to buy, they still cost more money and that’s a problem.
But it won’t be for long, say the financial gurus at UBS, which is the 29th largest bank in the world according to Accuity. UBS analyst Tim Bush tells The Guardian, “There are not many reasons left to buy an ICE car after 2025,” The key factor will be the reduction of battery prices below $100 per kWh, which Bush expects to happen in 2022. (There is good reason to believe Tesla is already below that number.)
Currently, the cost of the battery for an electric car can equal as much as 40% of its sales price but UBS expects that, by the end of 2022, that price premium will be below $2,000 and disappear completely by 2024. That assessment is based on its analysis of the seven largest battery manufacturers in the world. UBS says carmakers that try to hang on to sales of gasoline and diesel powered cars risk being left behind by rivals such as Tesla and Volkswagen — the world’s largest carmaker by volume — which is investing €33 billion to expand its EV manufacturing capability. Tim Bush adds that falling prices for batteries will alter the business case for plug-in hybrids, rendering them obsolete.
UBS predicts EVs will represent 17% of new car sales by 2025 and 40% by 2030. Matthias Schmidt, an independent car analyst, tells The Guardian a million electric and hybrid cars will be sold in 2020 in the EU out of a total market of 11 million — a market share of just under 10%.
One issue that cannot be ignored is that electric vehicles require fewer workers to manufacture them. A new battery manufacturer named BritishVolt has announced plans to build a battery factory in the UK, but government researchers point out it will require as many as eight similar facilities to replace the tens of thousands of jobs in the UK car industry that are reliant on building cars with internal combustion engines. It won’t do much good to reduce the cost of electric cars if there are fewer people who can afford to buy them.
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