Automakers and the media have been telling us for years that EVs are going to get cheaper as battery prices come down and ramped-up manufacturing leads to economies of scale. These points are likely true, and they'll probably happen over time, but the COVID-19 pandemic, chip shortage, and skyrocketing fuel prices have boosted the demand for EVs, which has caused the opposite – rising prices – at least for the time being.
With that said, Volvo CEO Jim Rowan believes that EVs are going to reach price parity with their petorl-powered cousins as soon as 2025. Obviously, there are many variables at stake here. If we're still in the midst of a global financial disaster and fuel prices remain super high, Rowan's optimistic estimate could change.
Regardless, the CEO of a luxury car company that's "all in" about an EV future is willing to say electric cars and SUVs will cost about the same as today's ICE equivalents in just two to three years. Rowan also went so far as to say that companies shouldn't be relying on government subsidies for success. They have to find a way to produce EVs that people want and can afford.
According to Automotive News Europe, the CEO shared at a recent event in Stockholm, Sweden:
"We think we get [to price parity] ... around 2025, where there'll be enough technology that's driving down cost on the battery. Technology will drive range up. Less batteries, but more range, at less cost — we'll get there."
Gallery: Volvo EX90
As you can see from Rowan's comments, rather than talking about battery prices coming down in general, he's citing the need for fewer batteries for adequate driving range thanks to advancements in technology. Since batteries are the most expensive part of an EV, this makes plenty of sense, though it doesn't account for automakers and dealers pricing electric cars higher than they should.
Volvo just officially revealed its EX90 three-row seven-seat midsize electric SUV, which will serve as a replacement for the current XC90. During the reveal, it also teased a smaller electric crossover. Volvo currently offers both the XC40 Recharge and C40 Recharge electric crossovers, and almost all of its models are available in various plug-in hybrid electric vehicle (PHEV) configurations.
Rowan also referenced a "city car" style crossover that Volvo will reveal in 2023. Smaller EVs should also help Volvo sell in higher volume and reduce prices. Chances are, the crossover Rowan was referring to is the one Volvo teased with the EX90 at the recent reveal event.
"We'll benefit [from the Inflation Reduction Act] when we get to the smaller SUVs that we'll bring."