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Why EVs Might Never Reach "Price Parity" With Conventional Cars

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Posted (edited)

New analysis by BloombergNEF indicates that EVs will be cheaper to produce than ICE vehicles by 2027. This makes proposed laws in the EU and elsewhere to ban the sale of new ICE vehicles in the 2030 to 2035 timeframe practical and achievable. Electric cars ‘will be cheaper to produce than fossil fuel vehicles by 2027’ | Automotive industry | The Guardian

 

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Electric cars and vans will be cheaper to produce than conventional, fossil fuel-powered vehicles by 2027, and tighter emissions regulations could put them in pole position to dominate all new car sales by the middle of the next decade, research has found.

By 2026, larger vehicles such as electric sedans and SUVs will be as cheap to produce as petrol and diesel models, according to forecasts from BloombergNEF, with small cars reaching the threshold the following year.

Electric vehicles reaching price parity with the internal combustion engine is seen as a key milestone in the world’s transition from burning fossil fuels.

The falling cost of producing batteries for electric vehicles, combined with dedicated production lines in carmarkers’ plants, will make them cheaper to buy, on average, within the next six years than conventional cars, even before any government subsidies, BloombergNEF found.

Edited by rperez817

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3 hours ago, rperez817 said:

New analysis by BloombergNEF indicates that EVs will be cheaper to produce than ICE vehicles by 2027. This makes proposed laws in the EU and elsewhere to ban the sale of new ICE vehicles in the 2030 to 2035 timeframe practical and achievable. Electric cars ‘will be cheaper to produce than fossil fuel vehicles by 2027’ | Automotive industry | The Guardian

 

That’s only 6 years away.  I’m skeptical since the cost curve for batteries hasn’t fallen nearly as fast as predicted.  If demand does take off, the prices of the commodities used in making the batteries, motors and power electronics will likely increase.  Also need to consider the source.  Bloomberg has an agenda.

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Posted (edited)

There was an interesting interview in AN with a VW exec that mirrors some of the the viewpoint quoted above, but not completely. 

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The new Volkswagen ID4 may be the 2021 World Car of the Year, but there's one thing it isn't yet: profitable.

The battery-electric compact crossover that began arriving at dealerships nationwide in March isn't making money, at least at its current U.S. price, says a high-ranking member of the German automaker's board of management.

Thomas Ulbrich, the new head of development for VW passenger cars, promises the ID4 will start making money for its parent company at some point in its "first life cycle."

 

I would argue that's a great prediction, but falls short of reality until it actually occurs. Then there's this:

 

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VW may have a more difficult, longer-term economic issue to overcome with the profitability of the ID4 and the rest of its massive, companywide $55 billion global EV plan.

Because the minerals used to make batteries are mined, the supplies are likely to become constrained as demand grows, driving up costs, argues Eric Noble, president of CarLab, a consulting firm in Orange, Calif.

"VW surely has the best intentions, but they're playing catch-up," Noble said. "What they'll discover with experience is that, as they lower the cost of the packaging and cooling around the cells themselves, the percentage of the battery's cost that is raw materials rises. Those raw materials are earth minerals, and the price of those rise with demand — the same as iron ore, gold, diamonds and crude oil."

VW's top management has repeatedly said that its global scale would help make EVs affordable by driving down purchasing costs and democratizing technologies across its brands and global markets.

But Noble said that scale doesn't work when demand is high and wide and supplies are constrained — just as automakers are discovering right now with microchips.

"When demand rises, prices rise, too," Noble said. "This is a tough lesson for carmakers used to lowering their costs with volume. These aren't assembly costs; they're mineral costs, and mineral prices don't work that way."

 

The article discusses the promise represented by solid state batteries, but finishes with this conclusion:

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Noble said that the steadily falling battery costs of the past few years are likely to level out at around $100 per kilowatt-hour using current chemistry and then fluctuate with mineral prices.

"If and when the solid-state battery is ready for prime time, things (costs) could change," Noble argued. "But VW shareholders, or German taxpayers, had better be prepared to massively subsidize every full VW BEV until then."

 

VW have the advantage of a home government that seems willing to support its auto industry, unlike other companies in other countries.

Full article: https://www.autonews.com/technology/whats-standing-between-vws-id4-and-profits-its-battery?utm_source=weekly&utm_medium=email&utm_campaign=20210509&utm_content=hero-headline

Edited by Harley Lover

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Posted (edited)
On 1/30/2021 at 12:24 AM, 92merc said:

Thanks for the chart AKirby.  That's my whole beef right there.  The US can do all the right things and the world will still be hosed if China doesn't change.  Only the US and EU are making substantial decreases.

That's what gets my goat about activists like Gretta T.  Comes to our country, chastises us for ruining her future.  And yet we're not the ones with the biggest problems.  Why doesn't she go over to China and preach to them???   Oh wait...  😁

Some facts not immediately apparent with those charts is the massive growth in manufacturing that has taken place in China over the past 30 years that mirrors a decline in manufacturing in the US and Europe. Sure, it’s by no means a zero sum game as China now does massive amounts of production for itself as well as the rest of the world. China also has built up the wealth and size of its middle class to roughly 707 million people or more than double the USA’s entire population.

Edited by jpd80

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Posted (edited)

On topic, I’m skeptical about  BEV sales rising as quickly as expected, we may well see gasoline and diesel power survive on the back of the lower cost, more practical hybrid an PHEV option that keeps the cost of fuel under control while also cutting emissions from ICEs in the least efficient parts of the driving cycle.

Edited by jpd80

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Posted (edited)
11 hours ago, slemke said:

That’s only 6 years away.  I’m skeptical since the cost curve for batteries hasn’t fallen nearly as fast as predicted.  If demand does take off, the prices of the commodities used in making the batteries, motors and power electronics will likely increase.  Also need to consider the source.  Bloomberg has an agenda.

It is already happening. In January, the lithium price index increased +15.6 per cent and cobalt reached two-year highs due to a combination of the upward trend in EV sales and the same global supply problems that are affecting other commodities. Granted the current cost rise comes from 2020's historic lows and we can expect more mining to come onstream as demand continues to surge (as economists note, high commodity prices tend to be the best long-term solution to high commodity prices), but the forward projection for battery minerals and metals is as Harley Lover states. 

Edited by Gurgeh

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Most of us are smart enough to know that battery evolution will go in leaps and bounds as battery producers see more returns from increased volume, that is essential to the majority of the market taking BEV seriously as a Nona fide replacement for ICE across all the major vehicle types. When they get the mix of deliverables right, the customers will come, I just don’t see that as yet and the premium pricing backs that up.

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Posted (edited)
On 1/27/2021 at 12:02 PM, 7Mary3 said:

True, but I don't think BEV's will have to reach purchase price parity with ICE vehicles.  BEV's will be cheaper to operate, require substantially less maintenance and repair, and last longer.  Resale value should be much better too.  Overall cost-of-ownership will likely be much less than an ICE vehicle.  Also, keep in mind that going forward there may be 'environmental impact' taxes placed on ICE vehicles and fossil fuels.  I completely disagree with those types of taxes, but don't think for a minute they are not being seen as a significant source of increased government revenue.

I’m not sure if I agree with this. Sure, EVs have less maintenance, but they won’t be cheaper to operate for long. When the demand for electricity goes up, so will the price. And when the government isn’t getting enough money from gas taxes, they are gonna get it from EVs, either with a tax on electricity or on your mileage.  

Edited by T-dubz

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Posted (edited)

The cost of producing ICE powered vehicles that remain CAFE and emissions compliant is now dependent upon manufacturers like Ford producing and selling sufficient numbers of hybrids and BEVs. Their plan is to keep ICE trucks and large Utilities for as long as possible to milk as much profit as possible. To that end, the hybrids and BEVs we’ll  see this decade will move the needle just enough to prepare everyone for a second major shift early next decade when battery density and charge rates will finally make ICEs and hybrids redundant.

Edited by jpd80

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EVs could be cost competitive with ICE if the volumes were similar.  Economies of scale will kick in.  New solutions to the current problems will be discovered if the market is there.  If EVs were 75% of global sales discovery of new materials and new solutions for battery tech would be incentivized.   Yes it is a bit of a chicken and the egg thing.  But I think 20 years from now ICE will be a hobby for collectors and 90% of new sales will be BEVs.  We go through this with every major shift in technologies.  LED bulbs, flat screen TVs, smart phones, home automation tech, some recent examples.  All too expensive in the beginning for the average consumer.  Yes cars are more complex and expensive than these things, but that just means the transition will take longer.  I just got my first battery electric lawn mower recently.  The cost / value proposition was finally right and I needed a new mower.  5 years ago I looked into them, and they didn't make sense yet. This spring they did. The "range", charge time and power are just fine. I also bought a new eco-boost vehicle.  The cost / value for me didn't make sense for the Mach E.  YET.  Automobiles will get there too.  I assume in 7 or 8 years when I am ready to replace my eco-boost the BEVs will have reached a cost / value point where it makes sense for a lot more people than it does today.  Give it 10 years and I think the conversation will be reversed.

 

 

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A lot of BEV vehicle development, driving range and sales potential is waiting for the next breakthrough which I think is Solid State battery technology which has the potential to drastically reduce BEV production costs, adjusted for inflation of course. 

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On 5/14/2021 at 1:59 AM, ice-capades said:

A lot of BEV vehicle development, driving range and sales potential is waiting for the next breakthrough which I think is Solid State battery technology which has the potential to drastically reduce BEV production costs, adjusted for inflation of course. 

Battery makers also have a vested interest in milking the Max out of existing lithium battery tech,

they learned a valuable lesson after NiMH tech was launched early and displaces NiCad batteries

causing many battery suppliers to take a hit on development costs.

 

In saying that, it only takes one supplier to switch to solid state / new chemistry and all the others

would be forced to follow. GM and Tesla will probably force through solid state in a few years time

or maybe a half step between.....

 

Better batteries are needed, lighter, cheaper, faster charging, enough range.

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13 hours ago, jpd80 said:

GM and Tesla will probably force through solid state in a few years time

or maybe a half step between.....

 

Any idea where Tesla are regarding development of solid state batteries (not being argumentative, I don't know)? GM seem to be focused more on touting 'Ultium' than touting development work on solid state. Toyota has been saying for some time that they will introduce solid state batteries in an upcoming product, but so far that hasn't happened. And then, of course, are the multitude of startups that are 'working on it'. In that vein, don't forget Ford's lead horse which claim its solid state design can be produced on existing lithium ion production lines (which would seemingly negate some of the concerns regarding sunk costs in existing Lion plants).

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43 minutes ago, Harley Lover said:

 

Any idea where Tesla are regarding development of solid state batteries (not being argumentative, I don't know)? GM seem to be focused more on touting 'Ultium' than touting development work on solid state. Toyota has been saying for some time that they will introduce solid state batteries in an upcoming product, but so far that hasn't happened. And then, of course, are the multitude of startups that are 'working on it'. In that vein, don't forget Ford's lead horse which claim its solid state design can be produced on existing lithium ion production lines (which would seemingly negate some of the concerns regarding sunk costs in existing Lion plants).

Here's a good interview on the subject with Hau Thai-Tang, Ford's chief product and operations officer. Good news and bad news.

 

Good news is that Solid Power plans to deliver to Ford (and BMW) next year a workable 100-amp per hour automotive-grade battery for testing, and that he confirms that Solid Power's products can be "built in the same manufacturing process that we would invest in to build lithium-ion batteries."

 

The bad news? When asked how soon he thought it would be feasible to switch over to solid state technology, he replied, "we think it's realistic to target by the end of this decade if we continue to make the progress we're making."

 

https://apnews.com/article/science-technology-business-1a65638a2b0cb538134f5c33048d3fb6

 

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On 5/12/2021 at 7:31 AM, jpd80 said:

On topic, I’m skeptical about  BEV sales rising as quickly as expected, we may well see gasoline and diesel power survive on the back of the lower cost, more practical hybrid an PHEV option that keeps the cost of fuel under control while also cutting emissions from ICEs in the least efficient parts of the driving cycle.

 

Good points Jpd. Other than Tesla, sales of BEVs have been disappointing, and hybrids are a nice alternative since you can run on electric much of the time and conserve gas.

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2 hours ago, FordBuyer said:

 

Other than Tesla, sales of BEVs have been disappointing,


Well that’s because nobody has really tried yet.  Mach-E is really the first that isn’t designed to be a compliance car or a low volume high cost vehicle.

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3 hours ago, FordBuyer said:

 

Good points Jpd. Other than Tesla, sales of BEVs have been disappointing, and hybrids are a nice alternative since you can run on electric much of the time and conserve gas.

Precisely, hybrids and PHEVs are the perfect outlet for amortising battery development costs while rolling out cutting edge tech in BEVs. Tesla is dedicated BEV, so there’s no opportunity to write down those development costs as quickly as Ford or GM. I actually look forward to how Ford balances progress on technology, bringing ICE/hybrids and their profits along at the same time as all the new BEVs in the latter half of this decade.

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3 hours ago, mackinaw said:

Europe is starting to sour on PHEV's.  Apparently, they aren't as cleaned as believed.  PHEV's could be phased out in Europe in the next few years which could impact Ford's EV plans.

 

https://fordauthority.com/2021/04/plug-in-hybrids-may-be-phased-out-in-europe-within-a-few-years/


Thats caused in part by laws that require PHEVs to run in charge sustaining mode until they get to the city where they run in EV only mode.  If they let them be used normally they wouldn’t be as bad.

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12 hours ago, akirby said:

Thats caused in part by laws that require PHEVs to run in charge sustaining mode until they get to the city where they run in EV only mode.  If they let them be used normally they wouldn’t be as bad.

 

The problem isn't EU laws, but the fact that most PHEV have ridiculously low AER. That applies to all automakers who make PHEV, in all regions around the world where they are sold.

 

PHEV exist only for regulatory compliance. With the exception of PHEV that have a longer AER than ICE range, they are in no way an appropriate substitute for or a "bridge" to BEV.

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Posted (edited)
9 hours ago, rperez817 said:

 

The problem isn't EU laws, but the fact that most PHEV have ridiculously low AER. That applies to all automakers who make PHEV, in all regions around the world where they are sold.

 

PHEV exist only for regulatory compliance. With the exception of PHEV that have a longer AER than ICE range, they are in no way an appropriate substitute for or a "bridge" to BEV.

Regardless of battery range, the rules assume the worst case, that PHEV owners drive with a discharged battery or in charge sustain mode, both of which jack up fuel consumption and emissions.

No amount of battery range will overcome the assumption embedded in the rules.

Edited by jpd80

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On 5/15/2021 at 4:58 PM, akirby said:


Well that’s because nobody has really tried yet.  Mach-E is really the first that isn’t designed to be a compliance car or a low volume high cost vehicle.

There are others who have tried, but they were going after the low price -high volume segment. GM and the bolt for example.  They went for the lowest cost with a decent range, but still missed the mark because it wasn’t refined enough, or low enough initial cost to compete with traditional econobox on price.  It appears 50k or so is the current sweet spot.  Even Tesla dropped/never built the lowest price model 3 configuration.  At 50k, it allows the mfg, to add enough equipment to be competitive in segments with premium powertrains.  Less than a week away from the lightning reveal and seeing what Ford has planned for the f150.  It should be able to fit nicely into the pricing and powertrain matrix.  Hopefully with higher volumes than the power stroke.  Maybe similar sales numbers to Raptor.

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1 hour ago, slemke said:

There are others who have tried, but they were going after the low price -high volume segment. GM and the bolt for example.  They went for the lowest cost with a decent range, but still missed the mark because it wasn’t refined enough, or low enough initial cost to compete with traditional econobox on price. 


That’s exactly what I meant by compliance vehicle.

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Posted (edited)
20 hours ago, rperez817 said:

 

The problem isn't EU laws, but the fact that most PHEV have ridiculously low AER. That applies to all automakers who make PHEV, in all regions around the world where they are sold.

 

PHEV exist only for regulatory compliance. With the exception of PHEV that have a longer AER than ICE range, they are in no way an appropriate substitute for or a "bridge" to BEV.

 

Please stop pretending your opinion is fact.

 

Here's a fact: I've owned a PHEV since 2013. I use it as intended, which is to say, I drive it as an EV locally, and use the gas engine on interstate trips. 

Here's another fact: I've only filled the gas tank one time in the last 12 months. Almost all of my driving (save one interstate trip that required filling the tank) has been EV.

Most likely I will replace this vehicle with another PHEV, which now come with almost double the EV range of my vehicle (looking at you Escape PHEV and RAV4 PHEV). 

PHEV's absolutely work if used as intended. If the EU cycle tests them as jpd80 described, then no wonder they aren't faring well in the tests. Testing in that manner would suggest that perhaps the EU has an agenda to make them look bad. That's my opinion - you should try typing that phrase yourself.

Edited by Harley Lover

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1 hour ago, Harley Lover said:

 

Please stop pretending your opinion is fact.

 

Here's a fact: I've owned a PHEV since 2013. I use it as intended, which is to say, I drive it as an EV locally, and use the gas engine on interstate trips. 

Here's another fact: I've only filled the gas tank one time in the last 12 months. Almost all of my driving (save one interstate trip that required filling the tank) has been EV.

Most likely I will replace this vehicle with another PHEV, which now come with almost double the EV range of my vehicle (looking at you Escape PHEV and RAV4 PHEV). 

PHEV's absolutely work if used as intended. If the EU cycle tests them as jpd80 described, then no wonder they aren't faring well in the tests. Testing in that manner would suggest that perhaps the EU has an agenda to make them look bad. That's my opinion - you should try typing that phrase yourself.

 

Anyone who typically drives less than 25 miles per day can get similar results.   PHEVs could reduce gasoline usage on passenger vehicles by 60%-80% on average (my guess) without any infrastructure changes or range anxiety.   But the "BEV or nothing" crowd isn't really interested in practical solutions with real benefits.

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