EVs will be cheaper than all fossil fuel cars by 2027 in the UK

Electric cars and vans will be cheaper to make than fossil-fuel vehicles in every light vehicle segment in the UK from 2027 at the latest, according to a new BloombergNEF (BNEF) study. It means ending the sale of cars with engines by 2030, as the government plans, will save car buyers money. Transport & Environment (T&E), which commissioned the research, called on the government to finalise its delivery plan to ensure there will be enough electric cars available to buy and sufficient public charging in place.

Electric family cars including SUVs will be as cheap to produce as petrol vehicles from 2026, while small cars will follow in 2027, BNEF projects.[1] As a result, EVs will be cheaper to buy, on average, even before any tax incentives. But BNEF found 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.

Greg Archer, UK director at T&E, said: “By mid-decade electric cars and vans will be cheaper to buy than equivalent fossil fuel cars, and with tax breaks for electric cars the government can bring forward this date. Ending the sale of polluting vehicles with engines by 2030 is entirely realistic, but this won’t happen unless car and van makers are required to mass produce EVs under strengthened regulations.”

New battery prices will fall 58% by 2030 (compared to 2020), rapidly reducing electric vehicle costs, the report finds. The use of dedicated manufacturing platforms for battery electric vehicles will allow carmakers to reduce costs by up to 25% thanks to simpler assembly, the use of standard battery packs, and the savings from producing higher volumes of various BEV models on the same chassis.

The anticipated dates for price parity could be pushed back if vehicle manufacturers delay the shift to mass production, T&E said. Current UK regulations require that battery electric cars reach only around a quarter of carmakers’ new sales by 2030 - far less than the two-thirds that need to be sold to be on track to achieve the planned phase-out. T&E has called on the government to introduce a zero-emissions vehicles sales target for vehicle manufacturers, with penalties if targets are not met, to ensure there is adequate supply of zero-emissions vehicles. Without the shift to mass production, prices for electric cars will not drop as forecast. 

Greg Archer said: “If carmakers expand production of battery electric cars, within a few years they will be cheaper to buy, much cheaper to run, and far better for the environment. It will also guarantee future jobs in UK vehicle and battery manufacturing and associated industries. The benefits are enormous. Now we need a plan to ensure the phase-out is delivered.”

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