Toronto, Ontario — Battery electric vehicles (BEVs) will be, on average, cheaper to produce than comparable internal combustion engines (ICEs) by 2027, claims market research firm, Gartner.
This belief is thanks to research from Gartner that outlines how new manufacturing methods are helping to lower production costs of electric vehicles (EVs).
Specifically, Gartner expects production costs to drop considerably faster than the costs of batteries, which are the most expensive part on an EV and account for around 40% of the vehicle’s price.
According to the market research firm, the analysis for this data was driven by “innovations that simplify production costs such as centralized vehicle architecture or the introduction of gigacasting that help reduce manufacturing cost and assembly time.”
“This new technology,” Pedro Pacheco, vice president of research at Gartner further noted, “means BEVs will reach ICE cost parity much faster than initially expected, but at the same time, it will make some repairs of BEVs considerably costlier.”
The market research firm further expects the average cost of repairing an EV body and battery after a serious accident to rise 30 percent by 2027. This could make vehicles suffering a collision more prone to a total write-off, as Gartner added that repairs could cost more than the residual value.
High costs tied to repairing EVs are already a concern among potential buyers. Gartner said there could be a consumer backlash if reductions in production costs come at the expense of higher repair costs. Gartner also expects that about 15 percent of EV companies founded since the last decade will be acquired or bankrupt by 2027.
“This does not mean the EV sector is crumbling. It is simply entering a new phase where companies with the best products and services will win over the remaining,” Pancheco said.
