For mass adoption to succeed, electric vehicles will need to sell at prices comparable to internal combustion cars while generating profits for their manufacturers. Despite recent supply chain issues that have caused battery affordability to decline, General Motors and Volvo are now predicting this will happen by the middle of the decade.
In an interview with Automotive News Europe At the recent unveiling of the EX90 electric SUV, Volvo Cars CEO Jim Rowan said he expects to reach price parity with internal combustion cars around 2025.
Rowan expects technology improvements to allow for greater range without increasing battery sizes, which will lead to cost savings. And while Volvo hasn’t confirmed whether the EX90 will qualify for the $7,500 federal electric vehicle tax credit under the revised Inflation Reduction Act (IRA), Rowan said that Volvo’s next smaller EVs are likely to be.
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GM expects EV benefits to match internal combustion vehicles by 2025, years ahead of schedule, CEO Mary Barra says CNBC and other media at the automaker’s Investor Day on Thursday.
The IRA was also a major factor in this rosy prediction. Advance incentives will boost profit margins for future electric vehicles, chief financial officer Paul Jacobson told CNBC, adding that GM expects to be “among the first, if not the first” to qualify for the full $7,500 credit. under the IRA, which adds new battery requirements. -supply of materials and domestic assembly mandates for eligible electric vehicles.
GM and Volvo think the IRA will eventually make a stronger business case for electric vehicles, but in the meantime the IRA has made some electric vehicles more expensive, thanks to a revamped vehicle tax credit electrical. cut drastically the number of eligible vehicles.
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GM and Volvo are just the latest examples of automakers predicting lower prices for electric vehicles that will make them more competitive with internal combustion cars and trucks. Once electric vehicles and internal combustion vehicles reach parity, many anticipate one of the most transformative periods ever in the automotive industry, even though one of the essential…battery price– retreated on affordability in 2021 and 2022. This remains true even though battery factories have intensified due to raw material limitations. This year Prices for used electric vehicles have also increasedso there are several market factors that need to line up for everyone to agree that EVs aren’t more expensive to start with.
Not all automakers see the shift to building electric vehicles in the United States as part of ongoing parity. Subaru virtually canceled EV assembly in the United States due to high labor costs, he claims.