EVs cheaper to produce than ICE vehicles by 2027

Electric cars and vans should be cheaper to make than petrol or diesel vehicles by 2027, according to new research.

The Bloomberg New Energy Finance (BNEF) study, commissioned by Transport & Environment (T&E), found that C and D segment vehicles and SUVs will be as cheap to produce as petrol vehicles from 2026, while small cars (B segment) will follow in 2027.

BNEF said falling battery costs, new vehicle architectures, and dedicated production lines for electric vehicles (EVs) will make them cheaper to buy, on average, even before subsidies.

However, it explained that the early build-up of EV production and sales will be crucial to drive down costs and generate consumer buy-in for further adoption in the future.

The Government said the UK is “accelerating further towards a greener transport future” as sales of EVs pass the 500,000 mark. 

The research found that battery electric vehicles (BEVs) could reach 100% of new sales across the EU by 2035, if lawmakers introduce measures like tighter vehicle CO2 targets and strong support for charging infrastructure.

T&E called on the EU to tighten emissions targets in the 2020s and set 2035 as the end date for selling new polluting vehicles.

The campaign group also said the EU could cut truck carbon pollution by more than a fifth (22%) in a decade by requiring its main cities to have electric truck charging infrastructure.

The UK Government announced last year that new petrol and diesel cars and vans will not be allowed to be sold in the UK from 2030.

It has, however, said that it will allow the sale of hybrid cars and vans that can drive a significant distance with no carbon coming out of the tailpipe until 2035.

However, vehicle manufacturers have pushed back against the Government’s plans by asking for a five year extension.

Julia Poliscanova, senior director for vehicles and emobility at T&E, said: “EVs will be a reality for all new buyers within six years.

“They will be cheaper than combustion engines for everyone, from the man with a van in Berlin to the family living in the Romanian countryside.”

Electric vans to be cheaper than diesel

The research suggests that light electric vans will be cheaper than diesel vans from 2025, and heavy electric vans from 2026.

However, as it stands today (May 10), electric vans only account for 2% of sales. T&E says EU lawmakers will need to set van-makers challenging CO2 targets, alongside dedicated e-van sales quotas, to increase investment and the number of electric models on the market.

Poliscanova added: “With the right policies, battery electric cars and vans can reach 100% of sales by 2035 in western, southern and even eastern Europe.

“The EU can set an end date in 2035 in the certainty that the market is ready. New polluting vehicles shouldn’t be sold for any longer than necessary.”

T&E says the EU Commission should set an end date for fossil-fuel car sales in June, when it will propose tightening the bloc’s car CO2 targets.

Last month, 27 major European companies called on EU lawmakers to set 2035 as the end date for selling new combustion engine cars and vans. A recent poll showed 63% of urban residents in Europe support a ban after 2030.

At least seven carmakers and 10 European countries have announced plans to phase out conventional cars. But, in the absence of an EU commitment, these deadlines remain either voluntary or uncertain as to their enforceability, says T&E.