For mass adoption to succeed, EVs will need to sell at prices comparable to internal-combustion cars while still generating profits for their manufacturers. Despite recent supply-chain issues causing a backslide in battery affordability, General Motors and Volvo now predict that will happen by mid-decade.
In an interview with Automotive News Europe at the recent unveiling of the EX90 electric SUV, Volvo Cars CEO Jim Rowan said he expected to reach price parity with internal-combustion cars around 2025.
Rowan expects technological improvements to allow for more range without increasing battery-pack sizes, leading to some cost savings. And while Volvo hasn't confirmed whether the EX90 will qualify for the full $7,500 federal EV tax credit under revised Inflation Reduction Act (IRA), Rowan said Volvo's upcoming smaller EVs likely will.
2024 Chevrolet Equinox EV
GM expects profits from EVs to match internal-combustion vehicles by 2025, years ahead of schedule, CEO Mary Barra told CNBC and other media during the automaker's investor day Thursday.
The IRA was also a major factor in that rosy prediction. Anticipated incentives will boost the profit margins of future EVs, CFO Paul Jacobson told CNBC, adding that GM expects to be "among the first, if not the first" to qualify for the full $7,500 credit under the IRA, which adds new requirements for battery-material sourcing and mandates domestic assembly for qualifying EVs.
Both GM and Volvo believe the IRA will eventually make a stronger business case for EVs, but in the interim the IRA has made some EVs more expensive—through a revamped EV tax credit that drastically cuts the number of qualifying vehicles.
2024 GMC Sierra EV Denali Edition 1
GM and Volvo are only the latest examples of automakers predicting lower EV prices that will make them more competitive with internal-combustion cars and trucks. Once EVs and internal-combustion vehicles pass parity, many anticipate one of the most transformative periods ever in the auto industry, although one of the essentials—battery pack price—backslid on affordability in 2021 and into 2022. That's held true even as battery plants have ramped up due to raw materials limitations. This year used EV prices have also surged, so there are multiple market factors that need to align for everyone to agree that EVs aren't more expensive up front.
Not all automakers see the shift to building EVs in the U.S. as part of the pending parity. Subaru has all but nixed U.S. EV assembly because of high labor costs, it claims.