EV Prices to Undercut ICE Vehicles by 2027, Gartner Finds

The same manufacturing processes driving production savings could also cause a surge in costs to repair after a collision.


Market research firm Gartner announced March 7 that battery electric vehicles (EVs) are set to become more cost-effective to produce than comparable internal combustion engine (ICE) vehicles by 2027, Reuters reported. The milestone is attributed to innovative manufacturing methods poised to drastically reduce production costs.

Gartner's research showed these cost reductions will outpace the decreasing costs of EV batteries, which currently represent about 40% of an electric vehicle's price.

"Innovations that simplify production costs, such as centralized vehicle architecture or the introduction of gigacastings, are pivotal in reducing manufacturing costs and assembly time," the firm stated.

Gigacastings, a technique popularized by Tesla, involve large casting machines that manufacture substantial single pieces of vehicle underbodies. This method not only streamlines production but also minimizes the labor required from robots, enhancing overall efficiency.

"This [new technology] 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," Pedro Pacheco, vice president of research at Gartner, told Reuters.

However, the report also highlights a potential downside to these advancements. The average cost of repairing an EV's body and battery after a severe accident is projected to surge by 30% by 2027. This increase could result in more vehicles being declared total losses after collisions, as repair costs may exceed their residual values.

Consumer apprehension regarding the high repair costs of EVs has already been noted as a concern. Gartner warns of a potential backlash if production cost savings lead to escalated repair expenses. Additionally, the firm anticipates a consolidation in the EV industry, with an estimated 15% of EV companies founded in the last decade facing acquisition or bankruptcy by 2027.

Despite these challenges, Pacheco remains optimistic about the EV sector's future. "This does not mean the EV sector is crumbling. It is simply entering a new phase where companies with superior products and services will prevail," he said.

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