The growth in the EV market in recent years has come about thanks to state subsidies and cheaper running costs that help to offset the higher cost of buying an electric vehicle. At some stage the cost of buying EVs and internal combustion engine cars will be the same, but that point has been assumed to be a long way in the future.
Now new research from Bloomberg suggests that it may be as soon as 2025. In addition, Renault says total ownership costs of EVs will be on a level with traditional cars by the early 2020s. A spokesperson for Bloomberg said ‘People will start to adopt them [EVs] more as price parity gets closer. After that it gets even more compelling.’
The cost reductions in EVs come at a time when stricter regulations affecting petrol and diesel cars come into effect to tackle climate change and air pollution, thereby narrowing the price gap.
More significantly, a view is emerging that demand for oil among the developed nations may have peaked, as alternative technologies (like EVs) and energy efficiency reduce the need for oil. The business management consultancy Roland Berger argues in a report published last month that as developing countries such as China and India industrialise, they will use oil more efficiently than the developed countries did. This could mean that the producers of oil from shale will find their investments were only of short-lived viability as demand falls but production costs rise.
Research for the European Climate Foundation indicates that where climate policies are implemented to drive investment in low-carbon technologies, demand for oil from transport will be significantly lower. This would result in oil prices stabilising to between $83 and $87 per barrel in the long run – rather than increasing to $90 per barrel by 2030 and over $130 per barrel by 2050 in a business as usual scenario.
Bloomberg has also produced figures on how much oil is being saved (or ‘displaced’) by the growth in electric vehicles. The first year for which it has figures is 2011, in which 300 barrels a day were saved. This had risen to 17,000 barrels a day by the end of 2016, and is expected to reach 28,400 barrels by the end of this year. It also says sales of EVs were up 55% in 2016 from 2015, which is a slower rate of increase from 2014-15.