NewEnergyNews: TODAY’S STUDY: The Cost Of An EV This Year

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  • TODAY’S STUDY: The Policy Fight Now For Transportation Electrification
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  • Weekend Video: U.S. Ocean Wind Rising
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    THINGS-TO-THINK-ABOUT THURSDAY, November 14:

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  • TODAY AT NewEnergyNews, November 19:

  • TODAY’S STUDY: The Trends In Distributed Solar Pricing and Placement
  • QUICK NEWS, November 19: Farms Can Lead Climate Crisis Solutions; Electricity Customers Saving With New Energy

    Tuesday, October 15, 2019

    TODAY’S STUDY: The Cost Of An EV This Year

    Update on electric vehicle costs in the United States through 2030

    Nic Lutsey and Michael Nicholas, April 2, 2019 (International Council On Clean Transportation)

    This working paper assesses battery electric vehicle costs in the 2020–2030 time frame, collecting the best battery pack and electric vehicle component cost data available through 2018. The assessment also analyzes the anticipated timing for price parity for representative electric cars, crossovers, and sport utility vehicles compared to their conventional gasoline counterparts in the U.S. light-duty vehicle market.

    INTRODUCTION

    The early launch of electric mobility is underway in many parts of the world. Plug-in electric vehicle sales amounted to more than 2% of new light-duty vehicles in 2018 and experienced more than 70% sales growth from 2017 to 2018, culminating in a worldwide total of 5 million plug-in electric vehicles at the end of 2018. Figure 1 illustrates the distribution of electric vehicle sales through 2018 among 10 countries that make up 92% of these sales, showing how the major markets in Asia, Europe, and North America have led the market development to date. Electric vehicle uptake is especially concentrated where targeted electric vehicle policies proactively address electric vehicle barriers related to model availability, cost, convenience, and consumer awareness through incentives and regulations.

    Several automakers have stated their intentions to sell more than 15 million electric vehicles per year by 2025, up from 1.2 million in 2017 and 2 million in 2018.1 This order of magnitude increase in electric vehicle deployment is directly related to the expected decline in battery pack cost over the 2017–2025 period. The increased production volume could further induce market competition and innovation in the battery supply chain, creating greater economies of scale and further cost reductions.

    This paper analyzes projected electric vehicle costs from 2018 through 2030. The primary focus is on fully battery electric vehicles, with associated evaluation of plug-in hybrid electric vehicles, based on bottom-up cost analyses of lithium-ion battery packs and other electric components. An assessment is made of the time frame expected for achieving upfront vehicle cost parity, which is based on initial costs, and first-owner cost comparisons for electric vehicles versus conventional gasoline vehicles. Questions about electric vehicle cost parity are broadly important to help inform the types of regulatory policy and incentives that would be most effective for the transition to a mainstream electric vehicle market…

    Battery Cost…Vehicle Cost Analysis…Electric Vehicle Price Parity…Consumer Cost Competitiveness…Consideration of Low Battery Cost…

    CONCLUSIONS

    This working paper synthesizes available technical data to analyze electric vehicle costs for cars, crossovers, and SUVs through 2030. The work assesses the time frame for upfront vehicle cost parity (based on initial costs) and firstowner cost competitiveness (based on a first owner’s use with fuel savings) for electric vehicles versus conventional gasoline vehicles. The analysis reveals two high-level findings.

    Electric vehicle initial cost parity is coming within 5–10 years.

    As battery pack costs drop to approximately $104/kWh in 2025 and $72/kWh in 2030, electric vehicle cost parity with conventional vehicles is likely to occur between 2024–2025 for shorter-range and 2026–2028 for longer-range electric vehicles. This applies to typical electric cars, crossovers, and SUVs. If faster battery cost breakthroughs lead to a further reduction in battery costs, for example to $89/kWh in 2025 and $56/kWh in 2030, this will bring electric vehicle initial cost parity forward by approximately one year.

    Cost-competitiveness for consumers approaches even faster than initial cost parity based on fuel savings.

    Analysis of first-owner 5-year ownership costs indicates that an average new vehicle buyer will see an attractive proposition to choose electric vehicles in the 2022–2026 time frame. The consumer ownership parity point for each vehicle application is one to two years sooner than initial cost parity, due to the high fuel savings of electric vehicles. For example, the first owners of 200-mile electric vehicles realize fuel savings of $3,500 for cars, $3,900 for crossovers, and $4,200 for SUVs, based on electricity costs typically being much lower than conventional vehicle gasoline expenses.

    Despite these positive findings, electric vehicles achieving cost parity does not ensure a complete transition to electric mobility. Norway, for example, provides incentives to make electric vehicles cost less than conventional vehicles.14 This has increased all-electric vehicle sales from nearly zero in 2012 to 30% of new vehicles in 2018. The relative progress in Norway underscores the importance of incentives. But it also underscores the insufficiency of cost parity to transition to an all-electric market; if cost parity was the only critical barrier, markets with such compelling incentives would more rapidly approach 100% electric. To comprehensively address the barriers to adoption, policies can encourage or require more electric models,15 a robust charging infrastructure ecosystem to ensure convenience,16 and programs to inform consumers.17

    This analysis has several limitations. The work is focused on average cars, crossovers, and SUVs without acknowledging heterogenous household vehicle needs. Technologies like plug-in electric hybrids may still be attractive for particular households, such as those with short commutes, frequent long-distance travel, and available home and workplace charging. Also, this analysis does not address pickups, which represent 11% of the U.S. light-duty vehicle market. Electric technology now has migrated from cars to crossovers and larger SUV models (e.g., Audi e-tron, Hyundai Kona, Tesla Model X, and many plug-in electric hybrids). Further migration into pickups with greater towing requirements has been slower, but electric pickup announcements continue from companies like Tesla, Ford, Rivian, and Workhorse. Improved cost analysis of charging infrastructure is also important, and cost savings depend on policies that ensure electricity prices remain relatively low.

    The findings in this paper lead to several policy implications. Battery costs, electric vehicle volume, and policy move in unison. The electric vehicle cost projections in this analysis are predicated upon sustained policy that drives increased electric vehicle battery volume. Nearly all of the electric vehicles in the world—more than 5 million through 2018—are in markets with regulations that require low-emission vehicles, offer incentives of thousands of dollars per vehicle, provide charging infrastructure, and have complementary awareness campaigns. Automaker announcements of plans to increase electric vehicle production by an order of magnitude by 2025 are largely consistent with this. Setbacks with regulations and incentives would slow progress, whereas stronger regulatory policy in more markets around the world would expedite the cost parity time frame presented here.

    Regulatory agencies have failed to acknowledge how quickly electric vehicles will reach cost parity with conventional vehicles. U.S. regulatory analysis, based on outdated data, indicates that electric vehicle costs remain dramatically higher than conventional vehicle costs through 2025.18 Based on the analysis provided herein, this is not the case. Similar analysis focused on markets around the world could, similarly, reveal that the most up-to-date electric vehicle cost data could justify much stronger regulations. As the cost parity point is reached, governments can dramatically accelerate the shift to clean mobility with regulations that spur electric vehicle deployment. -

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