As global electric vehicle production volumes proliferate, their costs decline and the prospects of a transition to electric vehicles increase. Governments around the world are working to accelerate the transition to zero emission transportation to meet air quality, climate, energy security, and industrial development goals. The United States is looking to reverse its laggard position by promoting electric vehicles with actions in the supply chain, regulations on automakers, incentives for consumers, and support to deploy charging infrastructure.
Improvements in battery and electric vehicle technology lead to research questions about how quickly electric vehicle costs will decline and reach price parity with conventional vehicles, and also about the magnitude of the associated fuel-saving benefits. This paper analyzes bottom-up vehicle component-level costs to assess battery electric, plug-in hybrid electric, and conventional vehicle prices across the major classes of the U.S. light-duty vehicle market through 2035. We apply these cost estimates to evaluate vehicle costs and their broader consumer benefits and discuss the implications for vehicle emission regulations in the United States.
Figure ES1 summarizes the findings for average conventional gasoline and electric vehicle prices through 2035 for U.S. cars, crossovers, SUVs, and pickups, which represent all light-duty vehicle sales in the United States. Conventional vehicles in these classes are compared with battery electric vehicles (BEVs) with electric ranges from 150 to 400 miles and plug-in hybrid electric vehicles (PHEVs) with ranges of 20 to 70 miles. Battery electric vehicles have upfront prices that are about $3,000 to $25,000 greater than their gasoline counterparts in 2022. With declining electric vehicle battery and assembly costs, shorter-range BEVs of 150 to 200 miles are projected to reach price parity by 2024–2026, followed by mid-range BEVs with 250 to 300 miles around 2026–2029, and the longest-range BEVs with 350 to 400 miles around 2029–2032. PHEV prices decline at a relatively slower rate due to their relatively smaller battery packs and the additional combustion powertrains; no PHEVs in any class reach price parity with conventional vehicles over the time frame of this analysis.