Study predicts EVs will be cheaper to make than petrol or diesel equivalents by 2027

A study by Bloomberg New Energy Finance (BNEF) has concluded that electric cars and vans in every European light vehicle segment will less expensive to make than their fossil-fueled equivalents by 2027 at the latest.

The report, commissioned by independent clan transport campaign group Transport & Environment, says small and mid-size cars and SUVs will cost the same to produce as petrol versions from 2026, with light segment models following a year later.

A projected 58 per cent reduction in battery costs between 2020 and 2030 along with dedicated electric vehicle architectures and specific production lines will make EVs more affordable, even before government subsidies. 

This does rely on accelerated uptake during the intervening years, though, which BNEF describes as “crucial to drive down costs and generate consumer buy-in”.

Measures required to achieve this include stricter CO2 emissions standards for car manufacturers, with a tough new 2027 target providing a big regulatory stick to go with strong state support for charging infrastructure expansion.

On the commercial vehicle front, light electric vans are expected to cost less than diesel ones from 2025 and heavy vans to reach price parity or lower from 2026. BNEF blames weak emissions standards for the two per cent market penetration of electric vans so far, saying they fail to stimulate manufacturer investment in the technology.

Van-specific CO2 emissions targets and electric van sales quotas would help overcome this hurdle.

All being well, electric cars and vans would reach 100 per cent of new sales by 2035 across Europe, even southern and eastern regions. But the report warns that this is only achievable with the right regulatory framework.

“If left to the market without strong additional policies, battery-electric cars will reach only an 85 per cent market share, and e-vans just 83%, in the EU by 2035 – missing Europe’s goal to decarbonise by 2050,” it says.