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Are Electric Vehicle prices heading down?

If you’ve been following the development of electric vehicles (EVs) for a while then you’ll be familiar with the concept of price parity, that magic moment when EVs become as cheap to buy as internal combustion (ICE) vehicles.

EV prices have been gradually falling for a while now, so the most affordable ones, like the BYD Dolphin, the GWM Ora, and the MG4, are now available for around $40,000. That makes them competitive with higher spec small cars such as the Toyota Corolla, though not with the very cheapest ICE vehicles, such as the Kia Picanto, which is around $18,000.

However, there are a couple of forces at work right now that could see some dramatic falls in EV prices, and a rapid plunge towards parity pricing sooner than expected.

Cheaper batteries

The first is that batteries are becoming cheaper. They’ve long been the most expensive part of an EV, but now economies of scale, technological innovation, and increased supplies of lithium are pushing prices down.

Chinese battery giant CATL is eschewing NMC batteries containing expensive lithium, nickel, manganese, and cobalt in favour of Lithium Iron Phosphate (LFP) batteries, which have more abundant and cheaper chemistry. Although LFP batteries may have lower capacity and voltage, they offer a longer usable life and are less fire-prone than NMC batteries.

The supply of lithium has also increased, with new supplies of the mineral from sources such as Bolivia coming online. That’s helping to reduce the price of the mineral, and with it, the price of batteries.

Price war

The other factor at play is that there’s a price war starting between EV makers in the face of lower-than-expected demand and increasing supply. While demand for EVs is still growing, it’s slower than forecasted, forcing makers such as Tesla to start cutting prices, with competitors following suit.

Carmakers have huge manufacturing capacity, and frequently a large inventory that needs to be cleared. That price war is at its most fierce in China, where concerns about jobs and incomes in a weakening economy are reducing demand for new EVs. Experts predict that many Chinese EV makers may fall by the wayside in a fiercely competitive market.

China’s BYD is just one of the country’s EV makers going all out to achieve price parity with ICE vehicles at home right now. It’s currently offering its BYD Seagull for just A$14,700 in China. That’s an extraordinary price for a well-appointed small car offering sharp styling, Bluetooth phone pairing, Electronic Stability Control, heated external mirrors, four airbags, and remarkable on-road performance.

Novated Lease

There’s no doubt that price parity with ICE vehicles is looming, but if an EV is on your wish list, then the way to get behind the wheel right now without handing over a fistful of dollars is with a Fleetcare novated lease. You’ll avoid paying thousands in GST on the purchase price and on those already lower running costs. And the tax benefits don’t end there, because you’ll also gain from the Fringe Benefits Tax exemption. It all adds up to making a novated lease on an EV a lot cheaper than you might have expected.

To find out more about a Fleetcare novated lease on your new EV contact Fleetcare today on 134 333.

Written by
Mark Schneider

Mark is a successful copywriter with over 20 years of professional writing experience.

We welcome him as a guest blogger to Fleettorque.

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