Electric cars to be cheaper to produce than ICE vehicles by 2027

Electric cars and vans will be cheaper to make than fossil-fuel vehicles by 2027 at the latest, according to a new study.

The study, conducted by BloombergNEF, claimed that electric sedans and SUVs will be as cheap to produce as petrol vehicles from 2026, while small cars will follow in 2027.

It found that falling battery costs, new vehicle architectures and dedicated production lines for electric vehicles will make them cheaper to buy, on average, even before subsidies. However, 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, BNEF found.

Julia Poliscanova, senior director for vehicles and emobility at Transport and Environment (T&E), which commissioned the study, said: “EVs will be a reality for all new buyers within six years. They will be cheaper than combustion engines for everyone, from the man with a van in Berlin to the family living in the Romanian countryside. Electric vehicles are not only better for the climate and Europe’s industrial leadership, but for the economy too.”

The study also found that light electric vans will be cheaper than diesel vans from 2025, and heavy electric vans from 2026, despite e-vans accounting for just 2% of sales currently.

T&E said EU lawmakers will need to set van-makers challenging CO2 targets, alongside dedicated e-van sales quotas, to increase investment and the number of electric models on the market.

It also found that battery-electric cars and vans could reach 100% of new sales by 2035, even in southern and eastern Europe, if lawmakers increase vehicle CO2 targets and ramp up other policies to stimulate the market such as a faster roll-out of charging points. T&E said that, if left to the market without strong additional policies, battery-electric cars will reach only an 85% market share, and e-vans just 83%, in the EU by 2035 – missing Europe’s goal to decarbonise by 2050.

Poliscanova added: “With the right policies, battery-electric cars and vans can reach 100% of sales by 2035 in western, southern and even eastern Europe. The EU can set an end date in 2035 in the certainty that the market is ready. New polluting vehicles shouldn’t be sold for any longer than necessary.”

T&E is also calling for the EU Commission to set an end date for fossil-fuel car sales in June, when it will propose tightening the bloc’s car CO2 targets.

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