Next-gen EVs will be cheaper to produce than gas cars by 2027

In three short years, battery electric vehicles will be cheaper to produce than ICE vehicles of the same size due to improved manufacturing methods – at least that’s the latest prediction from market research firm Gartner. Of course, those gains may be lost to the rising price of EV repairs.

Gartner predicts, too, that by 2027 15% of EV companies founded since the last decade will be acquired or bankrupt. “This does not mean the EV sector is crumbling,” said Pedro Pacheco, vice president of research at Gartner. “It is simply entering a new phase where companies with the best products and services will win over the remaining.” Of course, at least 18 EV and battery startups that went public in recent years and attracted huge investments are now struggling for cash, with plenty going belly up, including Lordstown Motors and Proterra.

Still, new innovations will push BEV price down, Gartner states. “New OEM incumbents want to heavily redefine the status quo in automotive,” he added. “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.”

By 2027, next-gen BEVs will be cheaper to make than comparable ICE vehicles, with production costs dropping faster than battery costs. But there’s a rub: Repair costs will be more expensive, Gartner says. By 2027, it predicts that the average cost of an EV body and battery “serious accident repair” will increase by 30%.

That means that crashed or damaged cars are more likely to be a total write-off since the repair costs will outweigh residual value, Gartner said. Plus, more expensive crash repairs may lead to pricier insurance premiums or even the refusal of insurance companies to cover particular car models. All this, of course, could incite consumer backlash if reductions in production costs come at the expense of higher repair costs, Gartner warns.

Still, things are looking up for the EV world, Gartner says, with market penetration predicted to grow this year despite all the doom and gloom we’re reading these days. EV shipments are estimated to reach 184. million units this year, and 20.6 million units in 2025. But the mood is changing, less “gold rush” and more “survival of the fittest,” Gartner says.