Closing the Longevity Gap: Are BEVs the Future of Durable Transport? – Securities.io

More than 17 million electric vehicles (EVs) were sold worldwide in 2024, which was a 25% increase from the previous year, marking a record-breaking year for global EV sales. 

This growth has been driven by subsidies, tax credits, falling battery prices, competition among manufacturers, and stringent emission standards. EVs are actually globally regarded as a promising means to reduce greenhouse gas emissions and decarbonize the transport sector. Battery electric vehicles (BEVs), in particular, are seen as transformative, offering the potential to replace fossil fuels entirely with renewable energy.

However, in order to estimate the true environmental benefits of these vehicles, we must compare them with existing petrol and diesel vehicles with internal combustion engines (ICEVs), consider their entire life cycle, and how the benefits are spread across that.

Producing an electric vehicle, for starters, is a resource-intensive process. According to the IEA, EVs require an average of six times the critical mineral inputs (copper, nickel, manganese, cobalt, lithium, and graphite) as conventional ICE vehicles. This means the environmental footprint of EVs is 50% higher than traditional vehicles during production. Moreover, the difference in upfront cost is currently $12,000.

However, EVs, unlike gas-powered ICEVs, are typically made up of a few dozen moving parts, which means the damage is less, and so is the need for maintenance. Argonne National Laboratory estimates maintenance costs to be $0.06 per mile for BEVs compared to $0.10 per mile for ICEVs. 

This means that not only can EVs be kept on the road past the average lifespan of an ICEV easily and cheaply, but with their technology getting better, the cost and longevity of EVs are also increasing. 

While just a single EV may be what one may need to purchase, the problem is these vehicles are still new, and available data is rather limited. In fact, only a few are a decade old, which means we have yet to figure out the exact limits of their life span. 

However, researchers are looking at the handful of those that do exist to get an idea about just how long these EVs can last. 

When it comes to the longevity of an EV, batteries are the biggest factor to be considered. And much like how our smartphones degrade over time, so do battery electric vehicles (BEVs), but replacing a car battery is difficult, and replacements are expensive.

The cost to replace a battery actually ranges between $4,000 (for a 30 kWh Nissan battery) and $10,000 (75 kWh Tesla Model 3). Meanwhile, replacing an ICEV transmission costs between $1,100-$3,400.

Having said that, modern batteries retain most of their power after a decade while allowing fleet operators to save up to 41% through cost reductions. Adequate charging infrastructure, especially in less urbanized areas, still presents a big challenge.

The good thing is batteries are one of the most active areas that go through constant research and development. With battery chemistry and management systems being worked upon, the lifespan of a BEV would continue to improve. 

Prices are already declining, and as their range keeps increasing, battery replacement will become more feasible, and longevity will also improve. 

How are EV Batteries Performing?

The rapid growth of EVs is driving the global demand for EV batteries, which is surging. This has led to a transformative shift in the EV battery industry with advancements seen in battery formats, chemistries, and structural designs.

However, while battery prices have plummeted about 90% over the past 15 years, batteries still account for almost a third of the price of a new EV. So, it is important that battery capacity increase so that EV owners can keep using the same cars. Several studies suggest that batteries are, in fact, lasting longer than we may have thought them to be previously.

As we shared in an article late last year, a study from battery diagnostics company AVILO found most batteries to retain more than 80% of their original capacity and be usable far beyond the usual warranty period. 

Geotab, a fleet management services provider, also analyzed data collected from 10,000 EVs before 2019 and reported that EV batteries only experienced an average decline of just 1.8% per year, lower than what was previously reported. The company’s report from last year also showed that 75% of light commercial vehicles can be replaced by comparable EVs, which can save $15,900 per vehicle over its lifespan.

Age, extreme heat or cold temperatures, operating state of charge, frequent fast charging, and charge-discharge cycles were reported to be common factors impacting battery lifespan. So, by following best practices for charging and use, EVs can last well beyond the vehicle’s useful life. 

A recent research by scientists working in the SLAC-Stanford Battery Center, meanwhile, stated that subjecting the EV batteries to normal real-world use can help them last about a third longer than researchers forecast. 

So, activities like short city trips, long highway trips, heavy traffic, and mostly being parked are far more beneficial for batteries than the steady simulated use new designs get tested for in laboratories. According to senior study author Simona Onori, who’s an associate professor of energy science and engineering at the Stanford Doerr School of Sustainability:

“We’ve not been testing EV batteries the right way. To our surprise, real driving with frequent acceleration, braking that charges the batteries a bit, stopping to pop into a store, and letting the batteries rest for hours at a time helps batteries last longer than we had thought based on industry-standard lab tests.”

This suggests that an EV owner may not need to replace their expensive battery or even buy a new car for several more years.

Now, new research is showing that the lifespan of EVs is already on par with that of ICE vehicles. By providing critical insights into the lifespan and environmental impact of EVs, co-author Dr. Viet Nguyen-Tien of the London School of Economics said:

“[The study marks] a significant step toward achieving a net-zero carbon future.”

BEVs, according to him, are no longer just a niche option but a viable and sustainable alternative to conventional gas-powered vehicles. The study also aims to help consumers make informed decisions, and regulators shape their policies and incentives.

And while BEVs have higher initial emissions from production, Professor Robert Elliott from the University of Birmingham noted that “a long-lasting electric vehicle can quickly offset its carbon footprint, contributing to the fight against climate change.”

Click here to learn about aluminium batteries.

Longevity Gap between BEVs & ICE Vehicles Fast Closing

The new study published in Nature¹ was authored by an international team of researchers from the London School of Economics, the University of Birmingham, the University of California, and the University of Bern. 

It analyzed more than 300 million MOT (Ministry of Transport) test records of diesel, petrol, and BEVs spanning from 2005 to 2022. Using this freely accessible data, the study found that though EVs exhibit lower reliability than ICEVs, technological advancements allow newer BEVs to accomplish comparable lifespans, even when they are used more intensively. 

Compared to 16.8 years of diesel cars and 18.7 years of petrol cars, EVs have a lifespan of around 18.4 years. These numbers remove those vehicles that got scrapped in the first few years of their production, which tend to be primarily because of road traffic accidents instead of the vehicle’s mechanical failure.

While petrol vehicles’ expected lifespan is about 0.3 years longer than EVs, they are found to be less sturdy than EVs, which log 124,207 miles over their expected lifespan, as opposed to petrol cars clocking about 116,000 miles in their driving life. 

However, it’s worth noting that the rapid rate of technological improvement means the expected lifespan of EVs produced a mere one year apart could be substantially different. 

Besides life span, BEVs also demonstrated the most improvement in reliability over time. The hazard rate of EVs has been found to be 12% lower than the ones manufactured the year before that. This means the likelihood of their failure with each successive production year is reduced by double-digit percent as opposed to a mere 1.9% decrease in diesel vehicles and a 6.7% improvement in petrol vehicles.

While data provides promising results for EVs, the study notes that there’s a need for more research due to the EV market still being nascent and the availability of limited data.

With these insightful and valuable results, the study emphasizes the environmental and economic advantages of BEVs and how they can help with consumer and policy decisions. Moreover, the research can help forecast automotive sales and fleet replacement strategies and facilitate planning for the end-of-life treatment of vehicles.

The study also noted that lithium-ion batteries, which remain the dominant technology for powering EVs, have uncertain longevity. Currently, most EVs come with warranties of 8 years and 100,000 miles for their batteries.

Overall, the study findings highlight the strong pace of technological improvement, which is leading to more efficient and durable models that can help create a sustainable future.

Click here to learn how majority of myths around EVs are untrue.

Leading EV Companies 

While the likes of Toyota (TM -2.72%), Volkswagen, and Honda (HMC -5.08%) sell the most cars worldwide, Audi and Skoda lead in terms of the longevity of petrol and diesel vehicles. So, now, let’s take a look at companies that are top-performing in the field of electric cars.

1. Tesla (TSLA -5.17%)

As the research noted, Tesla leads in BEV longevity. Elon Musk’s electric car maker also leads in the number of vehicles sold. In 2024, Tesla delivered about 1.79 million vehicles, which was a 1.1% decrease from the previous year and the first yearly drop since 2011. The Model 3 sedan and Model Y crossover together made up about 95% of Tesla’s global vehicle sales last year.

Investors, however, expect the company to deliver innovation on self-driving cars and AI and benefit from Musk’s close connection with President Donald Trump. The tech billionaire donated about $277 million to Trump’s presidential campaign and is now leading the brand-new Department of Government Efficiency (DOGE).

Besides fully electric vehicles, Tesla also manufactures energy generation and storage systems. Its lithium-ion battery energy storage products include Powerwall and Megapack. The company reported deploying 31.4GWh of energy storage throughout last year.

With a market cap of $1.3 trillion, Tesla is the 11th largest company in the world, while its owner, Musk, is the world’s richest man. As of writing, the company stocks are trading at $402.02, up 0.19% YTD. Its EPS (TTM) is 2.04 and the P/E (TTM) ratio is 198.64.

For Q4 of 2024, Tesla reported revenue of $25.71 billion, an increase of 2% from a year earlier, while earnings per share came in 73 cents adjusted. The company’s automotive revenue dropped 8% (from 4Q23) to $19.8 billion, of which $692 million was from regulatory credits. Meanwhile, energy generation and storage revenue came in at $3.06 billion for the last quarter, which was a massive increase of 113% from the same period in the prior year.

Tesla’s operating income also dropped 23% YoY to $1.6 billion, citing reduced average selling prices across its models as a major reason for the same while noting that “affordability remains top of mind for customers.” Net Income fell a whopping 71% to $2.32 billion due to the $5.9 bln one-time noncash tax benefit it received last year.

As for deliveries for the quarter, Tesla reported 495,570 figures, while about 459,000 vehicles were produced. During the same period, the company deployed a record 11.0 GWh of energy storage products.

For this year, the company expects its “vehicle business to return to growth” while reiterating plans to eventually “unlock an unsupervised FSD option.” It is also planning to start launching its driverless ride-hailing service later in 2024 in parts of the US.

2. BYD

Tesla’s biggest competitor is Chinese EV maker BYD, which sold about the same number of pure electric vehicles as Tesla last year. Besides making transportation equipment, electronic parts, and automobiles, it is also involved in the production of rechargeable batteries and photovoltaic products.

With a market cap of $112 billion, the company stocks, as of writing, are trading at $35.02, up 3% YTD. It has an EPS (TTM) of 1.66 and a P/E (TTM) ratio of 21.10, while the dividend yield is 1.25%.

Driven by rising demand in the local market, government trade-in deals, and increased consumer interest due to year-end discounts, BYD had record sales in 2024 despite facing intensifying competition in the domestic market. The company sold 4.27 million new energy vehicles (NEVs) in the entire last year, which includes both BEVs and plug-in hybrid vehicles.

These numbers represent a 41.26% spike from the same period last year, which also surpassed its previous target. BEV sales, in particular, rose 12.08% last year to 1.76 million vehicles, almost matching Tesla’s numbers. Meanwhile, Passenger NEV sales jumped 41.07% to 4.25 million units in 2024, and passenger PHEV sales soared 72.83% to 2.49 million units. 

Propelled by government subsidies, Chinese makers like BYD have been selling their cars at heavily discounted prices worldwide. However, they are now facing tariffs in the US, Canada, and Europe that can cause a potential slowdown in the short term. It is now on track to complete its $1 billion plant in Indonesia by the end of this year with an aim to dominate a new market.

For now, BYD is among the top 10 automakers in the world as it achieved stellar growth of over 250% in the US and Europe. Up 41.8% in volume, BYD’s growth has been unmatched in the year when the majority of automakers (Toyota, Volkswagen, Hyundai-Kia, General Motors, Stellantis, and Honda Motor) suffered a decline.

As for BYD’s power battery installations, it was 98.5 GWh in the first three quarters of last year, which puts its global EV battery market share at 16.4%.

Conclusion

Plug-in vehicles like battery electric vehicles (BEVs) offer the opportunity to entirely replace fossil fuels with low-carbon electricity generated from renewable sources such as solar, tidal, wind, and geothermal energy. And the more an EV stays on the road, the greater its environmental benefits.

But while BEVs are still a newer technology and have been seen as traditionally less reliable, they have come a long way since their early days when they were costly and had limited lifespan and use. The latest findings reveal a completely different picture — BEVs are rapidly evolving, and the latest models can be expected to outlast the average ICEVs.

So, with rising concern for the environment along with technological advances and supportive policies already driving the shift from traditional internal combustion engines towards these cleaner EVs, the increased longevity of these vehicles compared to their traditional counterparts can further boost their adoption and help us achieve a net-zero carbon future!

Click here for a list of top EV stocks to invest in.