The cost of owning an electric car is wriggling its way down to becoming competitive with its gas-powered peers, according to new projections by the Electrification Coalition.
Representatives from the Washington, D.C., advocacy group said during a conference call Thursday that short-range plug-in hybrid electric vehicles are already cost competitive with cars powered by internal combustion engines, as well as hybrid electric vehicles. The recent analysis assumed five years of ownership and about 14,000 miles driven each year.
The coalition teamed with professional services firm PricewaterhouseCoopers to calculate expected costs of several types of compact cars, pitting battery-electric against internal combustion engines, plug-in hybrids and hybrid vehicles. Including cost of purchase, fuel, maintenance, federal tax credits and residuals, the data show the cost of owning gas-powered vehicles continuing to rise through 2024 as costs for hybrids, plug-in hybrids and pure electric cars decline dramatically.
"In this analysis, we also saw that battery electric vehicles should have a total cost of ownership that is competitive with internal combustion engines in 2017," said Jonna Hamilton, the coalition's vice president of policy.
On the production side, that trend is reflected in lithium-ion battery prices, which have dropped from about $1,000 per kilowatt-hour in 2008, to $600 per kWh today. Hamilton said analysts expected that price to fall even further, to between $300 and $325 per kWh by 2020.
The EV market is already showing gains in popularity among consumers as production costs fall and drivers take advantage of remaining rebates and dirt-cheap leasing deals.
Hamilton said more than 110,000 plug-in vehicles were sold in the U.S. over the last 2½ years. June was the best month to date for plug-in cars, with nearly 9,000 units sold. Nissan sold 2,225 Leaf EVs, up more than 315% from the same month in 2012. GM sold 2,698 Chevrolet Volt plug-in hybrids, a 53% gain over June 2012, and Tesla Motors reported sales of 1,425 Model S electric sedans.
Tesla has made impressive progress in the luxury market, though a representative for the carmaker who was also on Thursday's call rejected the "luxury" descriptor, claiming "performance" instead. In the first six months of 2013, Hamilton said, Tesla captured 8.4% of the luxury market, with Model S sales higher than competitors including the Audi A8, BMW 7 series and Mercedes S-class models.
Nissan's Leaf took 3.3% of the subcompact market, while combined sales of Chevrolet Volts, plug-in Priuses, Ford Focus Electric cars and Ford C-Max Energis made up 1.4% of the compact vehicle market during the first half of 2013.
When asked if the anticipated tapering off of incentives for EV ownership might threaten electric car market growth, Hamilton sounded confident. "There may be a time where it's going to be difficult for the market to adjust to not having a federal incentive. I think that's going to be a natural issue," Hamilton said.
A federal tax credit that gives purchasers between $2,500 and $7,500 will be phased out as manufacturers reach a 200,000-unit benchmark for plug-in vehicles sold in the U.S., according to the Department of Energy. "But, the battery cost curves do show that the price of the battery will be nearly half what it is right now, and that will make up a big part of that," Hamilton said.
Future reports in the collaboration between the Electrification Coalition and PwC will further examine battery costs and sales and evaluate the infrastructure needed to support the market's growing fleet of electric cars.