Small EV prices will match petrol cars by 2025 – but not in Australia

The International Energy Agency (IEA) has predicted smaller electric vehicles will match the price of equivalent combustion models in less than two years, but not in Australia.

Speaking to media, including Reuters [↗], the IEA’s energy policy head, Timar Guel, said the price parity will be achieved in major markets, where there is currently strong demand and government support for EVs.

“Our current expectation is that we can see price parity in small and medium-sized electric cars in North America and European markets somewhere in the mid-2020s. For larger cars like SUVs and pickups, purchasing parity is likely to come later, probably into the 2030s,” Guell said.

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Smaller EVs are tipped to achieve the milestone first since they typically use smaller 25kWh to 60kWh battery packs, which are expensive to produce due to resource-limited and in-demand raw materials.

In contrast, electric SUV batteries typically range from 70kWh to 90kWh, with larger models and utes even going up to 229kWh.

In the context of ‘price parity’, it likely means that a base variant EV is on par with a high-spec petrol-powered model.

This EV price parity claim has been echoed by Volvo Cars CEO Jim Rowan using measures, such as cheaper lithium-iron-phosphate (LFP) cathode technology in entry-level models to help drive costs down.

The Volkswagen Group is also targeting its forthcoming small electric cars, including the Volkswagen ID.2 hatch and Skoda ‘Small’ city SUV to have a starting price of EU€25,000 (AU$40,000) harnessing Spain as a production hub.

Amid tightening Euro 7 emissions regulations, keeping models alive such as the Volkswagen Polo would be untenable – so small EVs matching the price of small combustion cars would likely mean small SUVs, which are typically more expensive than small hatches.

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The road ahead for EVs

The Global Electric Vehicle Outlook 2023 [↗] report also projects 14 million new EVs will be sold globally this year, representing 18 per cent total market share.

That will be a 35 per cent spike compared to 2022, where 14 per cent of all new cars sold were electric – compared to around 9 per cent in 2022 and less than 5 per cent in 2020.

EV sales continue to be led by China, which accounts for around 60 per cent of EV sales, followed by Europe and the United States.

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Photo via CarNewsChina

The study also finds promising signs for developing countries, with India, Thailand and Indonesia collectively tripling their EV sales last year compared to 2021. (Australia can perhaps also be thought of as a developing country, in EV terms... – Ed.)

It estimates that by 2030, more than 5 million barrels of diesel and gasoline will be saved per day from all EVs on the roads globally combined.

On the environmental sustainability side, electric carmakers Polestar and Rivian previously warned that a three-tier approach is needed to curb climate change and meet carbon neutrality goals in the automotive industry – switching to EVs, shifting to 100 per cent renewable energy for charging, and ensuring a sustainable material supply chain.

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