According to Gartner, new manufacturing techniques are anticipated to drive down the average production costs of battery electric vehicles (BEVs) below those of comparable internal combustion engine vehicles by 2027.
Woman charges her electric car – illustrative photo. Image credit: Jenny Ueberberg via Unsplash, free license
The research firm highlighted the significant reduction in production costs, outpacing the decline in battery costs, which constitute around 40% of an EV’s overall price.
Gartner attributes this trend to innovations that simplify production, such as centralized vehicle architecture and the adoption of casting processes, similar to Tesla’s use of gigapresses. These massive casting machines contribute to making large, single pieces of vehicle underbodies, streamlining production processes and decreasing reliance on robotic labor.
According to Pedro Pacheco, Vice President of Research at Gartner, this new technology will accelerate the achievement of cost parity between Battery Electric Vehicles (BEVs) and Internal Combustion Engine (ICE) vehicles more rapidly than initially anticipated. The tradeoff is, however, that it will also lead to significantly higher repair costs for some BEVs.
The research firm predicts a 30% increase in the average cost of repairing an EV body and battery following a serious accident by 2027. This increase may elevate the risk of total write-offs for damaged vehicles, as repair costs could surpass the residual value.
The heightened expenses associated with EV repairs are already a cause for concern among potential buyers, potentially resulting in consumer backlash if lower production costs translate into higher repair expenses.
Gartner also anticipates that approximately 15% of EV companies established since the last decade will face acquisitions or bankruptcy by 2027. Pacheco clarified that this does not signify the decline of the EV sector but indicates a new phase where companies with superior products and services will thrive.
Written by Vytautas Valinskas