Photo: Volvo
If you have looked at the price of new vehicles in the last couple of years, you might have noticed that EVs tend to be a bit more expensive than similarly-sized vehicles with an ICE. The difference in price has been reduced in some cases, but it is still there. It will not be there for long, though, or at least that is what Volvo's boss thinks.
As you may also be aware, there will come a time in Europe when new ICE vehicles will not be sold anymore, and it will not matter then if EVs are priced the same as their internal-combustion-engined equivalents, because you cannot buy the latter anymore. While that may be sad, it is believed that EVs will manage to be competitive in pricing with ICE vehicles sooner rather than later.
Volvo CEO Jim Rowan thinks that the equation is complicated, but that EV prices might reach parity with similarly sized vehicles around 2025. As the CEO of Volvo explained, his rationing works if the cost of batteries will be driven down by economies of scale, if battery technology reaches a point where fewer cells are needed for the same range, or if both situations happen.
At the same time, it is fair to note that internal-combustion-engined vehicles have seen rising prices by the year, and the same can be said for other objects, such as smartphones, if you think that vehicles are the only thing that is becoming more expensive with the release of a new model.
The problem is not just the chip shortage, the fallout of the pandemic, or the cost of materials in the world, but all of those problems combined with stricter emissions regulations, as well as more stringent safety standards.
Vehicle manufacturers must invest in developing safer cars that also are more fuel efficient, and they need to offset those investment costs somehow, otherwise, they will not be able to do business next year.
Volvo's CEO responded to the question of EV/ICE price parity in a discussion with Automotive News (sub. req.) during the reveal of the EX90, its latest seven-seat mid-size SUV that will be the replacement of the XC90. The EV will be more expensive than the XC90, at least when comparing starting prices, and the battery plays a key role in this.
Volvo CEO Jim Rowan thinks that the equation is complicated, but that EV prices might reach parity with similarly sized vehicles around 2025. As the CEO of Volvo explained, his rationing works if the cost of batteries will be driven down by economies of scale, if battery technology reaches a point where fewer cells are needed for the same range, or if both situations happen.
At the same time, it is fair to note that internal-combustion-engined vehicles have seen rising prices by the year, and the same can be said for other objects, such as smartphones, if you think that vehicles are the only thing that is becoming more expensive with the release of a new model.
The problem is not just the chip shortage, the fallout of the pandemic, or the cost of materials in the world, but all of those problems combined with stricter emissions regulations, as well as more stringent safety standards.
Vehicle manufacturers must invest in developing safer cars that also are more fuel efficient, and they need to offset those investment costs somehow, otherwise, they will not be able to do business next year.
Volvo's CEO responded to the question of EV/ICE price parity in a discussion with Automotive News (sub. req.) during the reveal of the EX90, its latest seven-seat mid-size SUV that will be the replacement of the XC90. The EV will be more expensive than the XC90, at least when comparing starting prices, and the battery plays a key role in this.
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