The high purchase cost of an electric car is cited by many motorists as a significant barrier to buying one. That may be about to change, according to a new analysis by the International Energy Agency.
The agency says prices of smaller electric cars and vans will drop to match those of petrol and cars in Europe and North America by the mid-2020's.
The agency predicts that electric vehicle sales globally are expected to grow by 35 percent this year to 14 million - 18 percent of the passenger car market. That figure was just 4 percent in 2020.
"Our current expectation is that we can see price parity in small and medium-sized electric cars in North America and European markets somewhere in the mid-2020’s", the IEA's energy technology policy head, Timar Guel, told Reuters and Automotive News Europe.
Mr Guel predicted that price parity for SUV-type vehicles and small trucks would take several more years.
Improvements in battery technology, a reduction in the cost of producing batteries and more efficient assembly of EV’s are being cited as reasons why the price drop may come about.
Volvo’s CEO, Jim Rowan, recently told Automotive News Europe that he expected price parity "around 2025, when there will be enough technology driving down cost on the battery. Technology will drive range up. Less batteries but more range, at less cost. We’ll get there".
The New York Times recently reported a drop in the price of lithium and cobalt - both crucial elements in car batteries - of 20 per cent and 50 per cent respectively.
If these price reductions are maintained they will have a significant impact on the price of electric cars, as batteries account for more than a third of the price of these cars.
