Market research firm Gartner predicts that battery electric vehicles (BEVs) will become, on average, cheaper to produce than comparable internal combustion engine (ICE) vehicles by 2027, thanks to new manufacturing methods that are driving down production costs.
Gartner expects production costs to decrease at a faster rate than battery costs, which currently account for around 40% of an EV’s price and are a major factor in its overall cost.
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The analysis by Gartner is based on innovations that simplify production costs, such as centralized vehicle architecture and the introduction of gigacastings. Gigacastings are large casting machines, pioneered by Tesla, that produce large single pieces of vehicle underbodies, streamlining production and reducing the work of robots.
“This (the new technology) means 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,” said Pedro Pacheco, Vice President of Research at Gartner.
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Gartner forecasts that the average cost of repairing an EV body and battery after a serious accident will rise by 30% by 2027. This could lead to an increase in total write-offs, as the cost of repair could exceed the residual value of the vehicle.
The high costs associated with repairing EVs are already a concern among potential buyers, and Gartner warns of a potential consumer backlash if reductions in production costs lead to higher repair costs.
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Additionally, Gartner predicts that about 15% of EV companies founded since the last decade will be acquired or bankrupt by 2027. Pacheco clarified that this does not indicate a collapse of the EV sector but rather a transition to a phase where companies with superior products and services will dominate the market.
