Will Electric BMWs Ever be Cheaper than Petrol and Diesel Models?

Not according to Klaus Frӧhlich, BMW board member and head of research and development. At the Paris Motor Show he claimed that electric BMW cars would never be cheaper than their traditional combustion engine counterparts. But is it too early to make such a bold claim? After all, it’s only been in the past few years that electric cars have started to take off and sales experienced a dramatic increase.

Expensive Production Costs

When asked whether electric vehicle costs could reach that of internal combustion vehicles, Klaus Frӧhlich said: “Never, never, never. It is very simple. If you are at full scale, one kilowatt hour of battery capacity will cost between €100 and €150. So, this means if you see a car with 90 to 100 kilowatt-hours, the cell cost alone will be €10,000 to €15,000.”

He went on to claim that at this price it’s possible to produce a whole car (with a combustion engine) for less than the price of an electric battery. With more electric cars being produced there is no economy of scale either, as the price of cobalt will increase as demand does. Unless alternative, cheaper batteries can be produced then it could be a future issue.

Government Incentives

In an attempt to meet climate goals set out in the Paris Agreement, many countries are offering incentives to manufacturers and drivers to drive greater electric car adoption. These can be used to offset some of the expensive costs associated with current batteries. For example, in China the mass manufacturing of lithium-ion storage is expected to lower battery prices.

According to the Bloomberg New Energy Finance report from March 2018, some electric cars will cost the same as combustion models by 2024 and could then drop to an even cheaper price. However, there is still a general feeling that battery prices need to fall even further for mass market adoption to become a reality.

Total Cost of Ownership

Even though electric cars currently cost more than petrol and diesel versions, one argument for adoption is that their overall running and ownership costs are a lot lower. The upfront price might be larger but split out across a few years it should be cheaper, with zero car tax to pay and much, much lower fuel costs. You still need to pay for insurance, an MOT and BMW warranty cover with an electric BMW, but this should still be a lot lower.

A lot revolves around whether a cheaper battery can be developed for electric BMWs to be cheaper than petrol and diesel models one day. In the meantime, they can still be worth the investment due to their cheaper running costs and better impact on the environment.