According to a recent research by Gartner, electric vehicles (EVs) are expected to be cheaper to produce than combustion engines by 2027. The consulting and market research company predicts that as car manufacturers transform their production processes alongside product design, the production costs of EVs will decrease faster than battery costs. However, Gartner also highlights that certain repairs to EVs will become significantly more expensive.
The company anticipates that the average cost of repairing an EV after a serious accident with major battery damage will increase by 30% by 2027. This could make EVs more susceptible to being written off as the cost of repairs may exceed the vehicle's residual value. Additionally, the higher cost of accident repairs could result in more expensive insurance premiums for EV owners.
Gartner warns that while the production costs of electric cars are decreasing rapidly, the high repair costs may cause a consumer backlash. Therefore, it is important for new methods of producing electric cars to also consider ways of keeping repair costs low.
The company predicts that by 2027, around 15% of electric vehicle start-ups founded in the last decade will either be acquired or go bankrupt. However, this does not mean that the electric car sector as a whole will fail. Instead, the market is transitioning to a phase where companies with superior products and services will prevail.
In terms of market penetration, electric vehicles are expected to continue growing significantly, with an estimated 18.4 million units delivered in 2024 and 20.6 million units in 2025. Nonetheless, the industry is shifting from a "gold rush" to a "survival of the fittest" scenario, where success will depend on how well companies can cater to the needs of the mainstream automotive market.
Source: Gartner