Could EVs achieve price parity with ICE cars by 2026? Let’s take a closer look at the economic principles that will shape the future of electric vehicles.

The Power of Economies of Scale

The U.S. currently produces and sells between 13-16 million new cars annually, with EVs comprising just 8-10% of this total.

Due to the power of economies of scale, as EV production scales up, the cost per unit should continue to decrease. Imagine what happens when major manufacturers like GM, Ford, and Toyota start producing 200k, 500k or even 1 million EVs each year?

As EV production ramps up and the demand for gas car parts decreases, the cost of gas cars will rise while EV prices will drop. This shift will make EVs even more attractive to consumers.

What are the implications of increased EV production?

• Longer Range EVs: As the cost to produce EVs drops, manufacturers can afford to install larger batteries. This could double the current average range of 250-300 miles to 500-600 miles within the next 5-7 years.
• Dealership Motivation: With higher profit margins on EVs, dealerships will be more motivated to sell them. Could we be seeing EV-only franchise dealerships soon?
• Cheaper EVs: As EV production scales up and costs come down, EVs will become as cheap, and even significantly cheaper than gas cars. This price reduction will create a snowball effect, potentially making EVs the default choice for new car buyers.
• Cheaper ownership: Today an average EV owner can save up to $1,100 a year in fuel costs compared to driving a gas car. With a decrease in gas cars on the road, you can expect gas prices to start climbing, making it even more attractive to switch to an EV.

The EV tipping point

We could soon reach a tipping point where the early majority begins to adopt EVs en masse.

The rapid closing of the price gap between gas cars and electric vehicles signals a positive future for EV adoption. With economies of scale driving down costs, enabling longer ranges, and increased dealership support, the shift to electric might be closer than it seems.

As we look to the future, it is clear that the time to embrace EVs at dealerships has come. At Lectrium, we are ready to be your EV-partner of choice, and make sure that auto dealers come out of this transition a champion.

If you are a dealership interested in selling more EVs and learning more about our offerings, book a 20-min demo with us.