ALEXANDRIA, Va.—Today, the cheapest electric car in the U.S. is the Mini Electric priced around $30,000. But some Wall Street analysts think a new battery-powered vehicle may eventually cost one-tenth of that, reports Business Insider.
According to a team of analysts at Morgan Stanley, EVs may cost $3,000-$5,000 at some point in the future. "Based on our frequent discussions with OEMs, suppliers and domain experts in the EV business, we would not be at all surprised to see the prices of many EVs eventually fall to below $5k/unit," the team said in an investor note.
The cost of a new EV has dropped in the past 10 years as batteries have become cheaper and production has scaled up. Tesla's first vehicle, the 2008 Roadster sports car, had a starting price of about $100,000. Today, its least expensive Model 3 sedan runs about $37,490, less than the average price paid for a new vehicle in the U.S. And there are some ultra-low-priced EVs available outside of the U.S., such as General Motors’ tiny EV that sells for $4,500 in China and French automaker Citroën’s $6,600 Ami, which is available in Europe.
Morgan Stanley believes EV prices will continue falling over the next decade as carmakers achieve higher volumes, streamline production and improve vehicle designs, Business Insider said. But the idea of a $3,000 car raises questions about whether automakers could turn a profit, and if the vehicle could meet safety regulations. Cheaper and easier-to-produce EVs would spell disaster for the sale of traditional gasoline-powered cars as a result, the Morgan Stanley analysts said.
Of course, carmakers have another problem. While they believe electric vehicles will dominate their industry in the years ahead, they need to sell that idea to the American public, reports APNews.
Steve Bock of suburban Raleigh, N.C., is a typical American driver. When he recently replaced his family’s 2013 Honda Pilot SUV, he considered—and then dismissed—the idea of buying an EV. An electric vehicle with enough room to carry his two dogs was too pricey, he decided, and he was worried about driving long distances between charging stations.
“I would consider it if the prices would come down,” Bock said. So instead, he settled on a Subaru Outback that runs on gasoline.
Consumer polls show that a good majority of Americans are aligned with Bock. An EV might be feasible if it cost less, if more charging stations existed and if a wider variety of models were available.
This widespread attitude creates a significant risk for the largest automakers. General Motors, Ford and Volkswagen plan to spend a an estimated $77 billion combined to develop global EVs during the next five years and offer everything from small SUVs to pickup trucks. GM has gone so far as to announce the goal of ending production of gasoline- and diesel-fueled passenger vehicles entirely by 2035.
Currently, EVs make up less than 2% of U.S. new-vehicle sales and about 3% worldwide. “It’s still a sector that doesn’t have a mass appeal to the entire population. It could be a financial drain if consumers do not buy at the same level,” said Jeff Schuster, president of global vehicle forecasting for LMC Automotive, a consulting firm.
EV sales have taken off in Europe and China, largely because of far-reaching pollution regulations and government incentives. Those tight environmental regulations are forcing automakers to move more EVs. Tighter regulations—and perhaps higher sales of EVs—might come to the U.S. if the Biden Administration succeeds in promoting EVs as part of a broad plan to fight climate change.
Or it could be an uphill battle.
Only 260,000 fully electric vehicles were sold last year in the United States out of a total 14.6 million new-vehicle market. In fact, Americans still spurn cars, in general, in favor of less-fuel-efficient pickups and SUVs.
Only 4% of adults with a driver’s license planned to acquire an EV the next time they buy a vehicle, according to Consumer Reports. Additionally, 27% said they would consider purchasing an EV. Meanwhile, nearly 40% express some interest in buying an EV, but not for their next purchase, and about 29% are not interested in an EV at all.
Observers predict U.S. sales will rise this year and take off in 2022 with predicted sales of more than 4 million EVs in the U.S. Yet even that would represent only one-quarter of the overall market. Still, automakers saw encouraging signs last month when EV sales rose 55% from a year ago to 18,969, according to Edmunds.com.
To see more on the EV market overseas, read “EV Lessons from Norway” in the April 2020 edition of NACS Magazine.
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