Fully electric vehicles are set to reach price parity with internal combustion engine-powered vehicles by 2025, or within the next two to three years, Volvo Cars CEO Jim Rowan told Automotive News Europe.

“We think we will get down to price parity around 2025, where there will be enough technology that’s driving down cost on the battery. Technology will drive range up. Less batteries, but more range at less cost,” Rowan told the news site.

According to Car Expert, Volvo aims to reach battery pack costs of AUD$100 (RM306) per kWh by 2025 or 2026, while the current leader in battery affordability is the lithium iron phosphate (LFP) battery in the Tesla Model 3, which was revealed to have a cost of AUD$131 (RM400) per kWh, according to the Australian website.

Renault CEO Luca de Meo thinks that price parity between EVs such as the firm’s Megané E-Tech Electric and ICE-powered vehicles is still some way off

This is in contrast to the view held by Renault CEO Luca de Meo, who thinks that price parity between EVs and ICE vehicles will not be arriving any time soon.

“I do not see this parity getting close. I can come up with better battery chemistry and better power electronics, but these gains would be erased when the price of cobalt doubles in just six months,” the Renault CEO said.

In terms of market positioning, Car Expert also notes that Volvo’s premium positioning means that its customers are less likely to be as price-sensitive as those of Renault, which also makes smaller vehicles in the mainstream segments.

Over in Malaysia, the Volvo XC40 Recharge Pure Electric facelift at RM278,888 is priced RM10,000 more than its petrol-powered siblings, the XC40 B5 Ultimate and the PHEV Recharge T8 Ultimate at RM268,888.

For some brands in Malaysia such as MINI, the EV model is cheaper than the equivalent ICE-powered car, such as the 184 PS/270 Nm Cooper SE that is priced at RM217,471, versus the 192 hp/280 Nm 2.0 litre turbocharged petrol Cooper S 3 Door that is priced at RM253,319.

The same goes for BMW in Malaysia, where iX3 in the Impressive trim level is priced at RM343,800, while the petrol-powered X3 xDrive30i is priced at RM358,800; both prices are for the full five-year extended warranty and servicing package, instead of the base two-year offering.

This is due to the exemption from import and excise duties for electric vehicles as announced by the Malaysian government in Budget 2022, and an update was announced in October with the tabling of Budget 2023 that the exemption for CBU (fully imported) EVs has been extended to December 31, 2024, while the exemption for CKD (locally assembled) EVs will be until December 31, 2025.

Importers who want to bring EVs into Malaysia will also no longer be required to pay the approved permit (AP) fee, which could make EVs in the country cheaper still, assuming the savings from not paying the AP fee is passed on to the customer. The AP exemption will be in effect next year from January 1 to December 31, 2023; this is applicable only to EVs.