By 2027, electric cars would be cheaper than ICE cars, according to a new study

Electric cars have a long way to go before they have cost competitiveness with internal combustion engine vehicles powered by fossil fuels, According to a report. With aggressive investment in renewable energy, electrification campaigns, and pollution norms tightening, the study predicts that electric cars will ultimately be cheaper to manufacture than fossil fuel-powered cars by the end of the decade, in 2027.

The report also notes that larger cars, electric sedans and SUVs will be as affordable as fossil fuel-powered alternatives by 2026. Smaller cars need more economies of scale in their favour, so they will take a year longer to reach parity.

The dropping cost of manufacturing batteries, along with dedicated production lines as many manufacturers commit to building capacity specifically for electric vehicles, is one of the main factors driving this transition. This is supported further by government incentives, which are available all over the world.

However, this study is pertinent to more established markets. An electric car currently costs about $35,000 on average. As compared to a market like India, this amount is more than 5 times the average selling price of a vehicle in India. However, the figure for fossil-fuel vehicles is $22,000, which is slightly lower but still higher in markets such as India.

Investment banks such as UBS have more ambitious projections for electric vehicles to achieve parity with fossil-fuel vehicles. This parity is expected to be reached by 2024.

According to a report commissioned by Transport & Environment, a Brussels-based NGO, battery prices will plunge by 58% between 2020 and 2030, reaching $58 per kWA. Many people agree that lowering the cost of batteries to less than $100 kWA is a significant move toward democratising electric vehicles.

2020 was a groundbreaking year for electric vehicles, especially in Europe and China. China became the world's largest EV market in 2020, but the EU surpassed it in 2021. The UK government intends to prohibit the selling of fossil fuels by 2030. Many European companies are pressing the EU for such a ruling.

Another significant step is the increase in range; many people agree that 320 km per charge is a safe bet. Better software optimizations, on-device AI capabilities with the introduction of advanced silicon, modern battery chemistries, and a new breed of solid-state batteries are all expected to improve the range by 2025. Faster charging is also a significant aspect.