Implement supply and demand side policies for electric vehicles to promote cost parity

Global passenger electric vehicle (EV) sales continued to increase last year, but their higher upfront costs remain a significant hurdle for widespread adoption for some markets. Governments can help the sector clear this hurdle by implementing supply- and demand-side policies for EVs to promote cost parity. BNEF’s Electric Vehicle Outlook (EVO) finds that internal combustion engine (ICE) vehicles and EVs will reach upfront price parity from 2024 to 2031, depending on the region and size of the vehicle. For example, large EVs and electric sport utility vehicles (SUVs) in Europe are expected to be the first segments to reach parity with their ICE counterparts. For markets with a longer timeline, like medium-size EVs in India, manufacturers can benefit from corporate tax exemptions and grants to help with the upfront hurdles of setting up shop or switching to EV manufacturing and scaling up production.