EV prices plummet to less than petrols and diesels as battery costs fall

The price of electric vehicles (EVs) is on a downward trend as battery costs decrease and manufacturers offer discounts.

Dr Andy Palmer, chairman ofElectric Vehicles UK, reminisced that price parity was "only a dream" when he was involved in the development of the pioneering Nissan Leaf. Back then, batteries cost a whopping $1,000 (£742) per kilowatt hour, but now they're priced around a mere $60 (£44.56) per kilowatt hour.

Battery packs could even drop to around £45 in the coming months, with Chinese brands also making strides to reduce costs. The monthly cost difference between petrol and diesel carsand EVs has shrunk by £32.

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Those who prefer traditional combustion engines are running out of reasons to stick with unleaded and diesel, especially with the Labour Party government's 2030 ban looming.

Pat Hoy, founder of Insider Car Deals, dismissed the relevance of the recommended retail price (RRP) for EVs, stating: "RRP is meaningless, no one actually pays it."

He revealed: "Our transaction price data shows the real story: the median discount on petrol and diesel cars is already over 10% (£4,134), and on EVs it's nearly 12% (£5,840)."

He added: "On PCP, the monthly gap between ICE and EVs has narrowed to just £32, and when you look at total cost of a PCP - including the balloon payment - ICE models still end up around 5% (£2,391) above RRP, while EVs come in almost 5% (£2,960) below."

Steve Fowler, founder of Carblah, highlighted that PCP fees are now £55 a month less than they were a year ago, reports Birmingham Live. He elaborated: "Recommended retail prices are yesterday's news. What matters most to car buyers is what they pay each month and when it comes to finance deals, EVs have more incentives and lower rate finance making them more affordable than ever.

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"The Independent EV Price Index has shown that PCP costs for a typical electric car have dropped by £55 a month or 10.8% compared with a year ago, while the average APR charged on an EV PCP finance deal is 3.5% versus 6.6% for a petrol or diesel model."

One motorist responded to these figures, stating: "£32 a month is a significant difference but what about the depreciation which is an even bigger difference. No way will my petrol car be going anywhere."

JATO Dynamicsanalyst Felipe Munoz previously suggested that the shift in prices was due to tougher regulatory and technological requirements and the falling cost of key EV components.

He observed: "The narrowing of the BEV-ICE price gap cannot only be attributed to the availability of cheaper BEVs on the market. Although carmakers' electric offerings are improving in terms of both quality and affordability, ICE cars have risen in price overall."

"This is a result of factors such as increased regulation, stricter standards and the introduction of more high-tech features, all of which have combined to hike the final retail price of these vehicles. In the meantime, electric cars have benefitted from lower battery costs, which has caused BEV prices to decline."