Projections on when the vehicle fleet will become electrified range from very aggressive to very conservative. For example, Tony Seba, a lecturer on entrepreneurship, disruption and clean energy at Stanford University in California, predicts that all new vehicles sold will be electric by 2025 because of their cost savings. Some oil majors, meanwhile, have more modest expectations.
Proponents of an aggressive scenario would point to the plummeting cost of batteries, which are the biggest price component of an EV. According to Business Insider, battery costs have fallen 90% in the past six years. Between 2021 and 2024, batteries will reach a price point that places EVs around the same cost of a conventional gasoline-powered car, according to the Rocky Mountain Institute (RMI), a Boulder, Colo.-based nonprofit that focuses on clean energy.
Even now, EVs have lower ownership costs. According to the institute’s estimates, driving an EV costs about 3.6 cents per mile, vs. 9 cents per mile for a gas-powered car, assuming gasoline at $2 per gallon. Gasoline would have to cost 80 cents per gallon to be competitive.
The conservative estimate would argue that consumers do not have awareness of ownership costs, especially on a per-mile basis. But will the growing familiarity with ride-hailing services, which typically price rides on a per-mile basis, change that mindset?