EVs cheaper than combustion engines by 2027

EVs cheaper than combustion engines by 2027

EVs cheaper than combustion engines by 2027
11 May 2021

With the ban on all petrol and diesel-powered vehicles from 2030 and London ULEZ expanding in just 6 months, more UK drivers reach to us to lease an electric car or electric van.  While we can offer competitive EV deals, the prices of electric cars and vans are still higher than those of petrol and diesel-fueled. This trend shouldn't last for too long as new research suggests that some EV segments should start achieving equal prices as soon as 2026. Will the EVs be ever cheaper than diesel and petrol though? Yes! And it won't be long before they are. 

Electric cars and vans should be cheaper than petrol or diesel vehicles by 2027

The Bloomberg New Energy Finance (BNEF) study, commissioned by Transport & Environment (T&E), found that light vans, medium cars, and SUVs will cost the same to make as petrol vehicles from 2026, with small cars following in 2027.

Dropping costs of the EV batteries and committed production lines for electric vehicles (EVs) will make them cheaper to buy, even without the grants, says BNEF, but the early accumulation of electric vehicles production and sales will be crucial to decrease the costs and stimulate consumers' support for further adoption. 

Affordable EVs in just six years

Julia Poliscanova, senior director for vehicles and emobility at T&E, 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.”

According to BNEF, light electric vans will be cheaper to buy or lease than diesel vans from 2025 so in just 4 years, while heavy electric vans will be more affordable than fossil-fueled ones from 2026. As for today, electric vans make only 2% of total van sales. That's mainly because of poor emissions standards that don't encourage manufacturers to invest in electric models. T&E highlights that EU lawmakers need to set more challenging CO2 targets for the van manufacturers as well as committed e-van sales share to increase investment and the number of electric vans on the market. 

Battery electric vehicles (BEVs) could achieve 100% of new sales by 2035 in the whole of Europe if lawmakers apply stricter emissions limits and sharpen other policies to provoke the market, such as a faster set-up of charging points. If no actions are taken, battery-electric cars will only score 85% market share and electric vans just 83% by 2035. Europe's goal for zero emissions is 2050 and that would possibly mean missing that goal.

Is Europe ready for electric vehicles?

Last month, 27 major European companies asked EU lawmakers to agree on 2035 as the end date for selling petrol and diesel vehicles. Interestingly, at the moment more than 60% of European urban residents support combustion cars and vans ban after 2030. Following the results of this poll, at least seven car manufacturers and ten European countries plan to discontinue diesel and petrol cars after that date however, without EU support and commitment these dates can't be enforced but rather met voluntarily.

The UK Government has already announced last year that the ban on petrol and diesel vehicles will start in the UK in 2030. You will still be able to drive a hybrid car or van for a further 5 years if it can travel a significant distance on battery power before switching to a conventional engine.

Concerns over UK fleet electrification

There are some serious concerns from the UK's small and medium businesses (SME) over the 2030 deadline. The survey asked 861 UK businesses if EV charging points are available on their radar, what are the barriers to installing those and who according to them is responsible for this process. Nearly 40% of the businesses said that tax incentives and cheap installation would encourage them to have charging facilities installed at their premises, while 32% of the business owners would be stimulated by the relative cost of EVs. 9% of the small businesses already have EV charging points installed and a further 21% are planning to install them before the petrol and diesel ban in 2030.  For medium businesses (employing 50 to 250 people) these figures are 17% and 30% respectively. 

There is no doubt the UK's SMEs acknowledge the importance of installing the EV chargers but it's clear that they need help from the Government and local authorities with the cost involved in fitting them. 

Reducing VAT on new EV vehicles, increasing EV grants, and further tax benefits for those actively supporting UK infrastructure would definitely help meeting the 2030 target.

 

Are you ready to switch to an electric vehicle? Are you being caught in expanding London ULEZ? Fed up with paying congestion charge? Check our electric van deals and our hottest electric cars below. 

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