BNEF Predicts Electric Cars Will Be Cheaper In Europe Than Conventional Cars By 2027
Recently, Transport & Environment asked Bloomberg New Energy Finance to take a look at the market for light electric vehicles in Europe with an eye to determining when they will become less expensive to manufacture than conventional cars with gasoline engines. The answer from BNEF is that 2027 is the year when that transition will occur. In addition, the Bloomberg team found that battery electric vehicles could reach 100% of new sales across the EU by 2035 if lawmakers introduce measures like tighter vehicle CO2 targets and provide strong support for charging infrastructure.
In particular, BNEF determined that larger electric sedans — those known as C and D segment vehicles — and SUVS will cost the same to produce as their gasoline-powered equivalents by 2026 while smaller B segment sedans will reach price parity by 2027. Light electric vans will be cheaper than diesel vans from 2025 and heavy electric vans will be cheaper by 2026, according to BNEF. It says the largest factor in reducing production costs will be falling battery prices, which BNEF says will decrease by 58% between now and 2030. New electric vehicle architectures and production lines dedicated to manufacturing electric vehicles will make them cheaper to buy, on average, even without subsidies.
Julia Poliscanova, senior director for vehicles and e-mobility at T&E, says: “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.”
But there’s a caveat. In order for these projections to become reality, governments will need to mandate stricter carbon dioxide emission standards and rapidly expand charging infrastructure according to T&E. Particularly when it comes to light, medium, and heavy commercial vehicles, those policy initiatives will be critical to achieving the number of sales needed for electric vehicles to replace sales of conventional vehicles.
Battery electric cars and vans could reach 100% of new sales by 2035, T&E says, if lawmakers increase vehicle emissions targets and ramp up other policies to stimulate the market such as a faster roll out of charging stations. If left to the market without strong additional policies, battery electric vans and cars will reach only an 85% market share or less by 2035, which will endanger Europe’s goal to reach zero carbon emissions by 2050.
Julia Poliscanova adds: “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.”
Last month, 27 major European companies called on EU lawmakers to set 2035 as the end date for selling new combustion engine cars and vans. A recent poll showed 63% of urban residents in Europe support a ban after 2030. At least 7 carmakers and 10 European countries have announced plans to phase out conventional cars. But, in the absence of an EU commitment, these deadlines remain either voluntary or uncertain as to their enforceability, T&E warns. The EU commission is scheduled to meet in June to consider whether to impose stricter emissions rules for vehicles sold in the various EU member nations.