The upfront price of new EVs in the UK is now not expected to reach parity with petrol and diesel cars until 2027 – later than previously expected.

That’s according to David Bailey, professor of business economics at Birmingham Business School, who said that the central issue was the cost of producing batteries.

Addressing the Vehicle Remarketing Association’s (VRA) annual seminar, Bailey said: “As the costs of electric cars comes down, particularly for the batteries, we expect take-up to improve. If the battery cost gets down below $100 per kWh, essentially that puts it on a par with petrol engine cars. We get below that, they start to become cheaper.

“At the moment in Europe, the UK, making the battery is probably about $130-140 per kWh. In China, they are getting it down to about $100. In fact, in Chinese markets, battery electric vehicles in many cases are cheaper than petrol.

“Battery electric prices here are coming down, but not as quick as anticipated. It probably won’t get down to parity with petrol/diesel until 2027, so we are not there yet. 

“That’s a problem. And so, the upfront costs of buying a battery electric car still put people off. The UK Government I think acted too soon in cutting subsidies to buy them.”

With uncertainty currently surrounding the government’s ZEV mandate, which is set to be reviewed, Bailey said that this policy alone would not be enough to achieve the government’s stated aim of reviving the 2030 ban date for the sale of new pure petrol and diesel cars.

He said: “At the moment, policy is all sticks and no carrots. Government is basically beating [manufacturers] with these targets and potential fines. 

“If they want us to get into EVs, they need to be offering incentives again, something like a cut to VAT, and rolling out the infrastructure much more quickly.

“I think the government have got to do four things very quickly. One, give more flexibility in the mandate. Two, go back to incentives for EVs to get people into them, because the upfront cost is too high. Three, roll out the charging infrastructure more quickly. And finally, have an industrial strategy that supports the industry.”