Tackling the Cost Barrier: Electric Cars Set to Outprice Petrol and Diesel Vehicles
Electric Vehicles to Experience Cost Parity with Gasoline Cars for the First Time
For many citizens, the steep cost of electric cars remains a major hurdle. But the tides are turning, as electric vehicles (EVs) are poised to become more affordable than their traditional counterparts for the very first time. Here's how:
The price reduction is already apparent, with current EV purchases plummeting at an accelerated rate. Furthermore, the recently inaugurated Merz government has unveiled a generous subsidy package aimed at making EV ownership even more enticing. This initiative is designed to encourage citizens to transition to cleaner vehicle options.
However, it takes more than financial incentives and inspiring rhetoric to bring about a revolution. A shift will only occur when EVs outpace combustion engine vehicles in terms of affordability. Currently, pre-owned EVs are available at reasonable prices, but the concern lingers over exorbitant depreciation costs associated with expensive brand-new EVs.
Meanwhile, Asian auto manufacturers are aggressively marketing budget-friendly EV models in Europe. Consequently, residents of our country may soon have the opportunity to purchase a new EV for under €17,000. In such a scenario, even affordable combustion engine vehicles would be rendered obsolete, making EVs the cheaper choice for the first time. While this transition isn’t imminent, we’re already witnessing these pricing patterns in the global market.
One thing is clear: When prices drop below a specified threshold, more citizens will seriously consider going electric. In this context, the German government may also implement regulations to control electricity prices for EV charging, further lowering their running costs compared to diesel and petrol vehicles in our nation. However, this journey is far from over.
Intriguingly, this price drop trend isn't limited to our shores. Countries like China have already witnessed two-thirds of their electric cars eclipsing the price of gasoline cars, largely due to advancements in technology, economies of scale in manufacturing, and government incentives [5]. Despite the unique challenges in the U.S. market, Tesla, the leading American EV seller, has seen a slight decrease in average transaction prices, dipping by about 2.8% year over year [4]. Additionally, deals on EV models from brands like Jaguar, Audi, Land Rover, and Hyundai can be found, particularly for overstocked vehicles [4].
As the world moves towards a more sustainable future, the rise in EV adoption is anticipated to skyrocket. By 2025, global EV sales are projected to surpass 20 million units, accounting for over a quarter of total car sales [3][5]. This growth is facilitated by factors such as advancements in battery technology, government incentives, and stringent emissions standards [5]. While obstacles such as higher tariffs and economic turmoil might slow down this shift, the long-term trend suggests a continuous increase in EV sales as they become increasingly competitive with traditional vehicles.
Other countries are already experiencing EVs becoming more economical than traditional vehicles, with two-thirds of electric cars in China costing less than gasoline cars due to technological advancements, economies of scale, and government incentives. The affordability of electric vehicles in Germany may soon surpass that of petrol and diesel cars, as the government considers controlling electricity prices for charging, Asia, particularly Japan and South Korea, are aggressively marketing budget-friendly electric vehicles, and some European brands are offering electric models for under €17,000.
As the technology behind electric-lifestyle improves and costs continue to decrease, it is likely that electric-vehicles will become the more affordable choice for a growing number of citizens, promoting a shift away from traditional fossil-fuel-powered vehicles.
