Several countries around the world are scrambling to replace their fossil-fuel-powered fleets with zero-emission electric vehicles (“EVs”) in a bid to halt runaway global warming before it’s too late. Unfortunately, electric vehicles made up just 3% of all vehicles purchased in 2020, and the path to mass EV adoption is still plagued with a number of obstacles. The chief hindrance to mass EV adoption is price, with most electronic vehicle models costing much more than the average consumer can afford.
However, industry projections say battery electric vehicles (“BEVs”) will become as affordable as internal-combustion engine (“ICE”) vehicles in the next decade, thanks to falling battery prices. Unlike traditional cars, EVs are powered by a rechargeable lithium-ion battery instead of a combustion engine. Since it is essentially the vehicle’s powerhouse, an EV battery pack is the most expensive component in a battery electric vehicle.
The minerals required to make these batteries are scarce and expensive. This increases the cost of production for electric vehicles, making the vehicles quite expensive. However, continued improvements in battery technology have steadily brought down these costs, and industry experts predict that production costs will fall to $100/kWh by 2023. At this price point, battery electric vehicles will be as cheap as conventional, gas-powered vehicles to manufacturer.
The learning curve effect, also known as Wright’s Law, states that for every cumulative doubling of units produced, lithium ion (Li-ion) battery cell prices reduce by 28%. This prediction has been accurate so far, with battery prices steadily decreasing as automakers produce more battery packs and electric vehicles. Data from ARK Invest shows that by 2023, the manufacturers’ suggested retail price (“MSRP”) for an EV with a range of 350 miles will be equal to a Toyota Camry with similar specifications. Over the course of five years, from 2021–2025, the cost of the 350-mile EV will drop by 53%, making it $8,000 cheaper than the $26,000 Camry.
On top of producing zero carbon dioxide at the tailpipe, electric vehicles also have fewer parts compared to traditional vehicles. Not only does this reduce the cost of production by limiting the number of components automakers have to install in the vehicle, but it makes EVs cheaper to maintain over the long run. Generally, an electric vehicle will cost much less over the course of its life in fuel and maintenance costs compared to a gas powered car.
As we wait for battery production costs to drop further, governments should subsidize electric vehicles to ensure they reach their carbon emission targets on time.
Not only are BEV costs coming down, but a number of companies, including Clean Power Capital (NEO: MOVE) (FWB: 2K6A) (OTC: MOTNF) are heavily investing in availing even more clean options of energy such as hydrogen fuel cells for the automobile industry, and these options increase the likelihood that there will be a sustainable vehicle that meets each motorist’s needs.
NOTE TO INVESTORS: The latest news and updates relating to Clean Power Capital Corp. (CSE: MOVE) (FWB: 2K6A) (OTC: MOTNF) are available in the company’s newsroom at https://ibn.fm/MOTNF
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