EV Prices are Dropping. Will ICE vehicles Stay Relevant?

Thanks to players like Tata Motors, Ather Energy, Ola Electric, etc. there has been a significant shift towards electric vehicles (EVs) in recent years. One of the critical factors driving this shift is the dropping prices of EVs, making them more affordable and appealing to consumers.

But with this price drop, a crucial question arises: Will internal combustion engine (ICE) vehicles stay relevant in the face of the growing popularity of EVs? In this article, we will explore the impact of decreasing EV prices on the future of ICE vehicles and examine the challenges and opportunities.

The Decline in EV Prices

EV prices have witnessed a considerable decline in recent years, primarily due to the decreasing cost of batteries. As battery cell prices have softened and are expected to decrease further, EV manufacturers like Tata Motors have taken proactive steps to pass on these cost benefits to consumers. Tata Motors, for instance, has reduced the prices of its Tiago.ev and Nexon.ev models by up to Rs 1.25 lakhs, making them more affordable for potential buyers.

Tata Electric Price Drop:

Variant	Old Price (in lakh)	New Price (in lakh)	Price Drop
Creative + MR	14.74	14.49	25,000
Fearless MR	16.19	15.99	20,000
Fearless + MR	16.69	16.49	20,000
Fearless + S MR	17.19	16.99	20,000
Empowered MR	17.84	17.49	35,000
Fearless LR	18.19	16.99	1,20,000
Fearless + LR	18.69	17.49	1,20,000
Fearless + S LR	19.19	17.99	1,20,000
Empowered + LR	19.99	19.29	70,000

Tata Tiago EV Price Reduction:

Variant	Old Price (in lakh)	New Price (in lakh)	Price Drop
XE MR	8.69	7.99	70,000
XT MR	9.34	8.99	35,000
XT LR	10.29	9.99	30,000
XZ + LR	11.09	10.89	20,000
XZ + Tech Lux LR	11.59	11.39	20,000

Ola Electric Price Drop:

E-Scooter	Old Price	New Price	Price Cut
Ola S1 Pro	1,47,499	1,29,999	17,500
Ola S1 Air	1,19,999	1,04,999	15,000
Ola S1X+	1,09,999	84,999	25,000

The Benefits of Decreasing EV Prices

Reducing EV prices brings several advantages to consumers and the environment. Lower prices make EVs more accessible to a broader audience, attracting cost-conscious buyers previously deterred by the price disparity between ICE vehicles and EVs.

As the market for EVs matures and volumes increase, economies of scale and a robust ecosystem are expected to reduce prices further. This ongoing shift towards a more affordable electric future aligns with the global goal of reducing carbon emissions and combating climate change.

Challenges with Electric vehicles:

Range Anxiety

One of the main concerns among potential buyers is range anxiety—the fear of running out of battery power before reaching their destination. Although EVs have made significant advancements in terms of range, charging infrastructure still needs to be further developed to alleviate range anxiety.

Charging Infrastructure Development

To address the challenge of charging infrastructure, governments and private companies are investing in developing a robust charging network.

For instance, the Karnataka government in India has announced plans to set up 2,500 EV charging stations under a public-private partnership model.

EV Resale Value

Another factor that potential EV buyers consider is the resale value of these vehicles. As EV technology continues to evolve rapidly, some consumers may worry about the depreciation of their EVs over time.

However, it is essential to note that various factors, including battery degradation, technological advancements, and market demand, can influence the resale value of EVs. As the market for EVs expands and matures, resale value concerns are expected to diminish, making EVs a more attractive long-term investment.

ICE Vehicles: The Established Choice

Despite the growing popularity of EVs, ICE vehicles still maintain a strong foothold in the automotive market. ICE vehicles have a well-established infrastructure and widespread availability of fueling stations, making them a convenient choice for many consumers. Additionally, ICE vehicles offer various options across different vehicle types, including sedans, SUVs, and trucks, catering to diverse needs and preferences.

EV VS ICE Total Cost of Ownership (TCO)

When considering a car purchase, the total cost of ownership (TCO) is crucial for consumers. TCO encompasses purchase price, fuel costs, maintenance, and depreciation. While the initial purchase price of an EV may be higher than that of an ICE vehicle, the overall TCO of an EV can be advantageous due to lower fuel and maintenance costs. As EV prices continue to drop and the cost of traditional fuels rises, the TCO advantage of EVs is becoming more evident to consumers.

EV Price Parity with ICE Vehicles

The decreasing prices of EVs have brought them closer to price parity with ICE vehicles. Affordable EV models, such as the Tata Tiago.ev and MG Comet EV, now compete with similarly priced ICE models like the Maruti Suzuki Swift and Hyundai i20. This price convergence is a significant milestone towards making EVs a mainstream choice for price-conscious consumers. As EV prices continue to drop, the price gap between EVs and ICE vehicles will shrink, potentially tipping the scales in favour of EVs.

Conclusion

The dropping prices of EVs have opened up new possibilities and challenges for the automotive industry. While EVs are becoming more affordable and appealing to consumers, ICE vehicles remain relevant due to an established infrastructure, availability, and diverse vehicle options. The ongoing development of charging infrastructure and the resolution of range anxiety concerns will play a vital role in accelerating the adoption of EVs.

As EV prices continue to drop and the TCO advantage becomes more evident, the market dynamics are expected to shift further in favour of EVs. However, addressing the remaining challenges and ensuring that EVs offer a seamless and convenient ownership experience to drive widespread adoption is essential. The future of transportation is undoubtedly electric, but the coexistence of ICE vehicles and EVs is likely to persist for some time, catering to consumers’ diverse needs and preferences.