The production costs of battery electric vehicles will substantially drop to undercut gas-powered vehicles by 2027, according to American research firm Gartner.
EV production costs to decline faster than batteries
Electric automakers will soon enjoy cheaper production costs, on average, than gas-based vehicle makers by 2027, according to Gartner’s forecasts on Thursday.
The research firm further noted that BEV production costs will fall way faster than power batteries, which currently account for about 40% of the overall vehicle price.
Notably, the expected production cost decline is primarily due to the emerging innovative production methods, which significantly optimize the overall process.
“New OEM incumbents want to heavily redefine the status quo in automotive. They brought new innovations that simplify production costs such as centralized vehicle architecture or the introduction of gigacastings that help reduce manufacturing cost and assembly time, which legacy automakers had no choice to adopt to survive.”
Pedro Pacheco, Vice President of Research at Gartner
EV and battery repair costs to increase by 2027
The imminent decline in electric vehicle production is indeed a piece of good news for both the electric automakers and customers. However, the OEMs’ continuous innovations in manufacturing technologies will substantially increase the costs of repairing electric vehicles.
Gartner expects the average costs of EV body and battery repair to surge by 30% by 2027, making damaged vehicles (from collision) more prone to a total write-off as the repair cost exceeds its residual value.
“…BEVs will reach ICE cost parity much faster than initially expected, but at the same time, it will make some repairs of BEVs considerably costlier.”
Pedro Pacheco, Vice President of Research at Gartner
EV companies’ future
Gartner also anticipates that approximately 15% of electric automakers that emerged since the last decade will either be acquired or bankrupt by 2027.
“This does not mean the EV sector is crumbling. It is simply entering a new phase where companies with the best products and services will win over the remaining.”
Pedro Pacheco, Vice President of Research at Gartner
Indeed, the enticing gains from succeeding in the electric vehicle market prompted many startups to penetrate the industry. However, some of them remain heavily reliant on external funding, making them more vulnerable to market challenges.
Despite having cheaper electric vehicle production costs by 2027, prospective buyers may still be discouraged from joining the shift as it seems to come at the expense of more expensive repair costs. That said, electric automakers must continue to explore new and cheaper manufacturing innovations to ensure balanced repair costs.
Nonetheless, Gartner believes that electric vehicles will continue to increase their market share, with EV shipments hitting 18.4 million units in 2024 and 20.6 million units in 2025.
