2025 is looking like the year of the 'affordable' EV.
Dacia has announced its second circa £15,000 EV, BYD's Dolphin Surf will arrive later this year and also cost around £15k, the new Fiat Panda EV is priced at £22,000 and VW's ID.1 small EV has been revealed with an estimated start point of £17k for 2027.
There are also now instances of premium battery cars achieving price parity with their combustion engine equivalents.
Mercedes caused a stir by announcing the new electric CLA - with a range of 495 miles - will go on sale at the end of this year will match the £40,000 start price of the hybrid version.
So, how are manufacturers managing to bring the cost of EVs down?
We look at three key reasons why electric cars are genuinely becoming affordable...
Electric cars are starting to achieve price parity with fuel cars. But how is the happening? We take a look at three key reasons that your new EV could easily cost less than £15,000
This is the key reason electric cars are becoming cheaper.
Lithium-ion batteries have always been one of the most significant costs of manufacturing an EV, but BloombergNEF’s annual battery price survey last year found that their costs are down 20 per cent.
With the average price of a battery pack falling to $115 per kWh, this decline represents the steepest fall in lithium-ion battery pack prices in seven years.
Crucially it is a significant step towards achieving price parity between EVs and internal combustion cars.
A few things contributed to this drop, but the surge in global production capacity for EV battery cells led by China – the country is expected to produce enough cells to meet 92 per cent of global demand - has created downward pressure on prices.
Cheaper materials, including the costs of metals and components as well as the uptake of lithium iron phosphate (LFP), which are more affordable, has driven prices down.
By 2030 BloombergNEF predicts EV batteries prices will fall to $69p/kWh down from $115p/kWh today
Goldman Sachs Research forecasts that next year battery prices could drop 50 per cent from 2023 - the moment they’d achieve near ownership cost parity with ICE cars.
By 2030 BloombergNEF predicts prices will fall even further - as low as $69p/kWh.
Already, the drop in battery prices is helping to eat away at the once premium price tag of zero-emission cars.
When Mercedes unveiled its new CLA EV, the German marque also confirmed that the circa £40,000 EV will be able to be priced the same as the hybrid version because battery production costs have fallen by 30 per cent.
This has reduced the EV’s overall cost by 15 per cent.
In 2023, around 60% of electric cars sold in China were already cheaper than their ICE counterparts. Cheap Chinese EVs are bringing prices down in the UK, and offering more choice
BYD's £15,000 Dolphin Surf city EV is coming to the UK market to compete against the Dacia Spring and Citroen e-C3
2. Growth of cheap Chinese EVs
In 2023, around three in five electric cars sold in China were already cheaper than their ICE counterparts.
On the flip side, the International Energy Agency (IEA) sys that BEVs sold between 2022 and 2023 in Europe were roughly 40 more expensive than conventional cars.
In 2022 and 2023, battery electric vehicles (BEV) sold in the region cost an estimated 40 per cent more than conventional cars, despite declines in average battery prices over that period.
Last tear BYD dethroned Tesla as the largest electric-car producer worldwide, selling $107 billion worth of cars worldwide (including hybrids) compared to Tesla’s $97.7 billion.
As BYD, MG (Chinese-owned by SAIC Motors) and new brands like Chery’s Omoda bring these cut-price EVs to UK shores, it means drivers can get their hands on cheaper EVs and it forces European suppliers to drop their prices too.
Good old economics says that increased competition pushes prices down.
Volkswagen has revealed a small urban electric car dubbed the ID.1 that will cost just £17,000 and will go on sale next year
Dacia is bringing a sub-£15k new city EV (sketched above) to Europe in the next 16 months to go up against the Renault Twingo EV
There are now over 130 EVs on sale in the UK – staggering when there were just eight models on offer in 2015.
The classic laws of economics say that with increased supply comes falling prices, and the flurry of new electric cars on sales is shifting that supply curve right.
Supply of new electric cars, or choice as we’d see it in the eyes of buyers, is consistently increasing as more brands electrify their line ups.
This is partly due to brands wanting to electrify and seeing this as the future, and in part due to the Government’s Zero Emission Vehicle Mandate targets as we creep closer to the 2030 ban on sales of new petrol and diesel cars.
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