Increasing competition, government incentives, and reducing Lithium prices are making EVs more affordable.
Some premium EVs are already priced about the same as similar gasoline-powered models.
This trend was started by Tesla, which cut prices for the Model 3 and Model Y by several thousand in January.
According to the International Council on Clean Transportation, electric vehicles could reach price parity with similar gasoline-powered models as soon as this year.
This is due to a number of factors such as the arrival of many new EV models, changes made to government incentives, and falling prices for battery materials.
Electric vehicles have typically been significantly more expensive to buy than similar vehicles powered by gasoline or diesel engines, but their increasing popularity could help them become even more competitive.
Indeed, the arrival of new electric models on the market is pushing automakers to reduce the price of their existing EVs, which they can afford to do due to falling lithium and cobalt costs.
This process began in January when Tesla decided to slash thousands from the price tag of its Model 3 and Model Y, the two most popular EVs in North America, in order to face the hordes of new models that have been introduced in the last few months and those that will be later this year.
By taking $13,000 off the invoice for the base Model Y, Tesla effectively priced its entry-level crossover in line with other premium models such as the Lexus RX. In the sedan market, the automaker made a similar move that resulted in the Model 3 being slightly more affordable than the entry-level BMW 3 Series.
Up to now, buyers who chose an electric car did so because that is what they wanted but soon, they might buy one because it was a bargain when looking at comparable models.
Automakers should even be able to reduce their prices further this year since Lithium and Cobalt, two minerals that are needed for batteries, are becoming more and more affordable.
In addition, government subsidies and incentives also help EVs be more accessible by making most buyers of eligible vehicles benefit from up to $7,500 in tax credits in the United States.
A new measure included in the Inflation Reduction Act could also bring down the cost of manufacturing electric vehicles in North America by around $9,000 once it becomes effective later this year.
Experts warn that raw material prices could go back up fairly soon since the minerals used are in short supply, but EVs are still expected to become more and more affordable over the next few years.
Source: The New York Times
