LONDON — Spurred by falling battery prices, electric vehicles could hit price parity with fossil-fuel models in Europe in 2024 and the U.S. market in 2026, and account for two thirds of global car sales by 2030, according to new research.
A report by the Rocky Mountain Institute (RMI) on Thursday predicts battery costs should halve this decade, from $151 per kilowatt hour (kWh) in 2022 to between $60 and $90 per kWh, making EVs “for the first time as cheap to buy as petrol cars in every market by 2030 as well as cheaper to run.
Batteries are expensive and account for around 40% of an EV’s price tag, a cost that has so far made them unaffordable for many consumers.
But those prices are steadily coming down as carmakers invest in new battery chemistries, materials and software to make more efficient EVs, RMI senior principal Kingsmill Bond told Reuters.
According to RMI’s analysis, the rapid growth of electric models in Europe and China “implies that EV sales will increase at least six-fold by 2030, to enjoy a market share of 62% to 86% of sales.”
EV sales in the European Union jumped almost 61% in July versus the same month in 2022, accounting for 13.6% of all car sales.
The European Union aims to ban the sale of new fossil-fuel models from 2035.
The United States has not yet committed to a date for ending sales of combustion engine models, but California and New York are both targeting 2035 to switch to selling only zero-emission models.
“It’s not radical whatsoever to see the continued exponential growth of electric vehicles,” RMI’s Bond told Reuters. “This is what one should expect.”
According to the RMI research, oil demand for cars peaked in 2019 and will fall by at least 1 million barrels per day every year after 2030.
Research released concurrently from Exeter University’s Economics of Energy Innovation and System Transition (EEIST) project also predicts exponential growth in EV sales.
It suggests EVs will reach a “tipping point” in price parity with fossil-fuel models as early as 2024 in Europe, 2025 in China, 2026 in the U.S. and 2027 in India “for medium-sized cars, and even sooner for smaller vehicles.”