Costs of EV ownership 'level with petrol/diesel within five years'

A new report from accountants Deloitte predicts that by 2024, the cost of owning a battery electric vehicle (BEV) will be on par with that of a petrol or diesel vehicle.

The company’s research shows global EV adoption rates increasing from two million units in 2018, to four million in 2020 and 12 million in 2025, before rising to 21 million in 2030.

By 2030, BEVs will significantly outperform the rest of the EV market, accounting for 70% of total EV sales, says Deloitte.

Deloitte believes that, after years of being viewed as a fringe technology, the BEV market is finally nearing a tipping point. A number of factors including a positive change in customer perceptions, technological advancements and greater intervention from governments are combining to focus attention on BEV adoption.

Deloitte estimates that the market will reach a tipping point in 2022 – when the cost of ownership of a BEV will be on par with its internal combustion engine counterparts.

With cost of ownership no longer a barrier to purchase, BEVs will become a realistic, viable option for any new car buyer. However, simultaneous analysis of manufacturer capacity forecasts to 2030 suggests that there is a significant ’expectation gap’ growing. In fact, the overall industry capacity forecast for 2030 is approximately 14 million units above our projections for consumer demand, says Deloitte.

Its analysis points to two factors in accelerating BEV uptake: growing consumer demand for greener vehicles, coupled with government policies that offer financial incentives while placing inner-city restrictions for petrol and diesel vehicles.

While upfront purchasing costs of EVs remain the biggest barrier for consumers, the research reveals how, as technology improves, this and other consumer concerns will gradually ease over time.

Michael Woodward, UK automotive partner at Deloitte, said: “In 2018, we saw global EV sales surpass two million units for the first time; twice those sold in 2017.

“In the UK, the cost of petrol and diesel vehicle ownership will converge with electric over the next five years.

“Supported by existing government subsidies and technology advances, this tipping point could be reached as early as 2021. 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.”

Growing demand for greener vehicles has seen the majority of OEMs announce their ambitions in the EV market and the emergence of a number of new entrants to the automotive market. However, Deloitte’s research suggests that the number of manufacturers is unsustainable.

Woodward continued: “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.

“This gearing up of EV production is driving a wide ‘expectation gap’ and manufacturers, both incumbent and new entrants alike, will need to adapt towards this new competitive landscape.

“Those that can successfully build trust in their brand, ensure a positive customer experience from initial sale through to aftercare, and reflect consumer shifts towards the sharing economy in future business models will successfully navigate this.

“Equally, continual investment in engineering talent and the formation of partnerships with bespoke battery producers and third-party mechanic networks will also be important.”

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The full report can be downloaded here