A recent analysis by research firm Gartner suggests that battery-electric vehicles (BEVs) could surpass gas-powered cars in terms of production cost efficiency by 2027, driven in part by advancements in manufacturing techniques such as Tesla’s Gigacasting methods.
In a press release issued on Thursday, Gartner highlighted the anticipated shift, noting that the forthcoming generation of BEVs is poised to achieve lower production costs on average compared to vehicles equipped with internal combustion engines (ICEs). This revelation coincides with a trend among automakers towards the development of higher-volume, lower-cost BEVs, with innovations like Tesla’s Gigacasting techniques playing a pivotal role in driving down production expenses.
Pedro Pacheco, Vice President of Research at Gartner, emphasized the transformative impact of new entrants in the automotive industry, stating, “New OEM incumbents want to heavily redefine the status quo in automotive. They brought new innovations that simplify production costs such as centralized vehicle architecture or the introduction of Gigacastings that help reduce manufacturing cost and assembly time, which legacy automakers had no choice to adopt to survive.”
Furthermore, Gartner anticipates that production costs will decrease at a faster rate than battery costs, hastening the achievement of price parity between BEVs and ICE vehicles. Pacheco elaborated on this projection, noting that while BEVs may reach cost parity with ICE vehicles sooner than anticipated, the cost of repairs for BEVs could also increase significantly.
Responding to Gartner’s assessment, Tesla’s Vice President of Public Policy and Business Development, Rohan Patel, underscored the current affordability of Tesla vehicles, particularly through leasing options. Patel highlighted the availability of leasing a Tesla Model 3 for $329 per month and a Model Y for $379 per month, emphasizing the brand’s commitment to accessible pricing.
Gartner’s analysis also forecasts a potential 30% increase in the average cost of EV battery and serious accident repairs by 2027, attributing this trend to the widespread adoption of new production technologies. Additionally, the firm predicts that market competition will intensify, potentially leading to bankruptcy or acquisition for up to 15% of EV manufacturers established in the last decade.
Pacheco clarified that while this may signal a new phase for the EV sector characterized by heightened competition, it also presents opportunities for companies with superior products and services to thrive.
In terms of market outlook, Gartner projects a steady growth trajectory for EV shipments, estimating 18.4 million units in 2024, rising to 20.6 million units by 2025. However, the firm acknowledges a transition from the “gold rush” era of EVs to a “survival of the fittest” paradigm, driven by automakers’ responsiveness to the evolving needs of early EV adopters.
