Thursday, December 1, 2022
News Volvo EVs will Reach Parity with gas-Powered Models by 2025

Volvo EVs will Reach Parity with gas-Powered Models by 2025

Advancing EV technology and higher margins are contributing factors.

  • Volvo says advancements in battery technology will bring the price down in the next few years.

  • The company’s next EV will be a smaller model, sitting below the XC40 Recharge in its lineup.

  • According to Volvo, many of its upcoming EVs will be eligible for the new US EV tax credits.

Volvo has just introduced the EX90, its new electric flagship and its first EV to be built on a platform that doesn’t also underpin a gasoline-powered model.

During the launch of this new model, the brand’s CEO said that Volvo expects its electric vehicles to reach price parity with its gasoline-powered models as soon as 2025.

According to the executive, this is because battery technology will make it possible to extract more range from fewer batteries, thus making it possible to lower the production costs while still being able to offer more range on a full charge.

Supporting this theory, the average price for lithium-ion battery packs is now 80 to 90% lower than it was twelve years ago. On the other hand, electric motors are getting gradually more expensive.

Another reason that can explain how Volvo can hope to achieve price parity in a little over two years is that its batteries are supplied by CATL, which is a price leader in terms of EV batteries.

Currently, CATL batteries as the one used in the Tesla Model 3 cost around US $131 per kilowatt-hour, but Volvo wants to drop this figure to under $100 per kWh by the middle of the decade.

This would make it possible for the automaker to sell its upcoming EVs, one of which will be a more affordable SUV positioned below the XC40 Recharge in its lineup, at a lower price while staying profitable.

This smaller model will likely be built at the automaker’s South Carolina plant since the CEO said that it will qualify for the revised $7,500 EV tax credit in the US, which now requires vehicles to be manufactured in North America.

Making smaller EVs profitable is easier for Volvo than for many other companies since the Swedish automaker is a premium brand, and therefore its profit margins are higher than those of downmarket brands, many of which still can’t afford to make cheaper EVs.

Source: Autonews Europe via Carscoops

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