EVs cheaper than ICEVs by 2022

Chevrolet Volt battery pack

From Bloomberg:

Every year, BloombergNEF’s advanced transport team builds a bottom-up analysis of the cost of purchasing an electric vehicle and compares it to the cost of a combustion-engine vehicle of the same size. The crossover point — when electric vehicles become cheaper than their combustion-engine equivalents — will be a crucial moment for the EV market. All things being equal, upfront price parity makes a buyer’s decision to buy an EV a matter of taste, style or preference — but not, for much longer, a matter of cost.

Every year, that crossover point gets closer. In 2017, a BloombergNEF analysis forecast that the crossover point was in 2026, nine years out. In 2018, the crossover point was in 2024 — six years (or, as I described it then, two lease cycles) out.

The crossover point, per the latest analysis, is now 2022 for large vehicles in the European Union. For that, we can thank the incredible shrinking electric vehicle battery, which isn’t so much shrinking in size as it is shrinking — dramatically — in cost.

Analysts have for several years been using a sort of shorthand for describing an electric vehicle battery: half the car’s total cost. That figure, and that shorthand, has changed in just a few years. For a midsize U.S. car in 2015, the battery made up more than 57 percent of the total cost. This year, it’s 33 percent. By 2025, the battery will be only 20 percent of total vehicle cost.

My colleague Nikolas Soulopoulos, author of the research note, provided further insights. The first is that he expects electric vehicle chassis and body costs to drop slightly, while those same costs will rise modestly for combustion vehicles “as a result of light-weighting and other measures to help comply with emissions targets.”

Second, Soulopoulos expects bigger cost improvements in the electric powertrain, as “large-volume manufacturing is only now beginning for such parts.” By 2030, costs for motors, inverters and power electronics could be 25 to 30 percent lower than they are today.

[Read more here, including news about all-electric excavators, electric ferries and electric planes]

Some points:

1. Every year, the crossover point moves closer, presumably because battery costs have fallen faster than forecast.  Will that happen again?
2. BNEF is looking for cost parity for "large" cars by 2022.  But we're close already.  The $35,000 Tesla is very luxurious and comfortable, and it costs about the same as a BMW or a Mercedes-Benz.  However, the legacy car manufacturers are talking 2022 for large-scale production of EVs.  
3. The crossover point for cheap cars will be later.  But there will be some reduction in battery size to make small EVs cheaper, as has already happened in China.  This will be made easier to sell because chargers will get much faster.  If you mostly use your car in a city to commute, fetch the kids, do shopping, go out for dinner, you don't need much storage.  And if there is a network of fast chargers available for when you do drive long distance, then a small battery is OK.   The Microlino is a lovely example of an urban EV for congested cities.
4.  By 2025, more than a third of new car sales will prolly be EVs.  At that point, demand for petrol (gasoline) will start to fall by 2.5% per annum (assuming a 12 year life), and the rate of decline will only accelerate as EVs move towards 100% of new car sales. 
5. Cheap storage will also permit high percentages of renewables in the grid.  
6. Cheap storage is essential for the green energy revolution.  The good news is—it's happening.