Electric cars ‘will be cheaper than standard cars’, report says

A report from Bloomberg predicts that hybrid and electric cars will be cheaper than standard cars within six years, with sales of electric cars reaching 41m by 2040, or a third of the market.

The company claims the low price of petrol is not the key incentive for motorists moving from conventional engines to hybrids. Instead, Bloomberg New Energy Finance believes the declining cost in batteries is going to be crucial at bringing the prices down, enabling electric cars to make their mark and become mainstream.

Salim Morsy, senior analyst and author of the study, said the predictions are based on crude oil price recovering to $50 from their current price of around $30 per barrel, then trending back up to $70 a barrel or higher by 2040.

He said: “If the oil price were to fall to $20 and stick there, this would only delay mass adoption of [electric cars] to the early 2030s. In the next few years, the cost-of-ownership advantage will continue to lie with conventional cars, and we therefore don’t expect [electric cars] to exceed five per cent of sales in most markets – except where subsidies make up the difference. However, that cost comparison is set to change radically in the 2020s.”

The report also found that electric vehicles could displace oil demand of 2m barrels a day as early as 2023, creating an oil surplus.

Patrick McLoughlin, secretary of state for transport, said: “The UK is a world leader in the uptake of low-emission vehicles and our long-term economic plan is investing £600 million by 2020 to improve air quality, create jobs and achieve our goal of every new car and van in the UK being ultra-low emission by 2040.”

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