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The escalation in the development of electric vehicles will slow down after the first boom

Electric vehicleshave revolutionized the automotive market in a surprisingly short period of time; without taking into account that it was born before the internal combustion car itself. However, it seems that it will be difficult to keep up, as in the distant future, the commitments to achieve a 100% electric automotive ecosystem it will begin to show some signs of weakness.

Electric vehicle battery prices have fallen dramatically in the last 10 years, beating many previous predictions, and electric car sales are increasing exponentially. But, according to Jeremy michalek, professor of engineering and public policy at the Carnegie Mellon University of Pittsburgh (Pennsylvania, USA) run by the Vehicle Electrification Group (VEG), we must be cautious with the bullish predictions on electric vehicles.

In an opinion piece written for MarketWatch, the teacher states that this rhythm will not continue forever. Their main arguments center on the production and price of batteries. Although the latter have improved substantially and come down in price, the economies of scale that helped drive the same changes are now close to zero. Even the production process improvements that helped reduce battery costs are reaching a fixed ceiling.

The teacher points out the fact that auto companies have to make a profit. Therefore, charging less than the cost of batteries will not be a sustainable business model, so the savings can only be reduced no matter how efficient the production processes are. And that need to make a profit probably means that EV prices are as low as they are likely to go down in the near future. Because nobody gives anything away, what matters is the business.

As companies seek to establish themselves in the market and grant cross subsidies to comply with relevant regulationsSome of them have been willing to suffer an impact on the price of their cars. Even Tesla makes a substantial amount of money selling emissions credits to other manufacturers. But, as more and more brands enter the electric car market, those advantages will be reduced and zero-emissions tariffs are unlikely to go much lower than they already are.

The good news for these vehicle enthusiasts is that the innovation It is still an area where different companies can cut the price, but it is likely to be marginal figures. Although new chemicals and so-called solid-state batteries may lead to a new boom in electric vehicle innovation, there are many ballots that this technology does not reach consumers until the next decade, or so Michalek defends it in his article.

What the pedagogue wants to make us understand with his arguments is the fact that it must be taken into account that there is a possibility that the drop in prices for electric vehicles will slow down. In fact, bills could go up if materials costs rise or if governments decide to stop subsidizing the industry, although the latter does not seem to happen in the short or medium term. Everything indicates that the adoption of an electric car could be limited in the coming years.

Source: MarketWatch

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