Electric vehicles will soon be cheaper than regular cars because maintenance costs are lower, says Tony Seba
All new vehicles would be electric by 2025, due to cost-effectiveness rather than a green revolution, Tony Seba, a serial entrepreneur and author, told a Nomura investment forum.
Electric vehicle (EV) performance has been improving so quickly and prices have been falling so fast that the internal combustion engine (ICE) wouldn't be able to compete for much longer, Seba, the author of "Clean Disruption of Energy and Transportation," told the Thursday forum.
"You will soon be able to get Porsche performance for Buick prices and when you get that, neither Porsche nor Buick are able to compete," he said.
He said he expected the cost of an electric vehicle to fall to about $30,000 by 2020, compared with the $33,000 current median price of a new ICE car in the U.S. By 2022, a low-end EV would be available for as little as $22,000, he predicted.
Seba said the "marginal cost" of owning an EV was essentially zero because maintenance costs were so low, noting that while ICE cars had more than 2,000 moving parts, EVs had about 20, making for few breakdowns.
That was why electric-car maker Tesla felt comfortable offering an infinite-mile warranty on its models, he said, adding that rather than just a "green" choice, EVs were on track to become "the rational, economic choice" very quickly.
Seba, who teaches at Stanford University and is a board director or advisor to several alternative energy start-ups, is not alone in expecting a quick uptick in adoption.
But not everyone was as optimistic on the speed of the shift to EVs.
In a research report released this month, Nomura estimated that sales of EVs globally would grow to 2.4 million units by 2020, compared with 348,000 in 2015. That compared with its forecast for 91.54 million total vehicles to be sold globally in 2016.
It also estimated that sales of plug-in hybrids would rise from 384,000 in 2015 to 2.4 million in 2020, while its forecast for hybrid vehicle sales was at 4.7 million by 2020, up from 2015's 1.7 million.
Nomura forecast that EVs would make up 2.4 percent of total vehicle sales by 2020, up from 0.4 percent in 2015.
The investment bank also noted that with automated driving options likely to be widely adopted by 2020 in developed markets, that could give consumers more incentive to replace their cars even sooner than usual.
Adoption of EVs, meanwhile, might not be left entirely to market forces. Many countries have introduced incentives to buy the cars because they offered other advantages, including the emission of far less pollution than an internal combustion engine.
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—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1