Prices of smaller EV models will drop to rival those of combustion engine cars in Europe and North America by the mid-2020s, the International Energy Agency said.
EV sales globally are expected to surge 35 percent this year to 14 million, the Paris-based body said, comprising 18 percent of the passenger car market, up from just 4 percent in 2020.
"Our current expectation is that we can see price parity in small and medium-sized electric cars in North America and European markets somewhere in the mid-2020s, said the IEA's energy technology policy head, Timar Guel.
For larger cars like SUVs and pickups, purchasing parity is likely to come later, probably into the 2030s, Guell added.
China features prominently in the IEA's annual outlook on EVs, making up half the electrified vehicles on the road worldwide including full-electric cars and plug-in hybrids, and with 60 percent of EV sales last year taking place there.
The country has also seen prices for some smaller EV models edging lower towards those of their combustion-engine equivalents, Guell said.
The agency raised its EV sales forecasts in part because of the U.S. Inflation Reduction Act, which supports green industry and subsidizes consumers' purchase of electric vehicles.
SUVs and large cars account for nearly two-thirds of EVs in China and Europe and a greater proportion in the U.S.
In emerging and developing economies, two- and three-wheel electric vehicles outnumber cars. Over half of India's three-wheeler registrations in 2022 were electric, according to the study.
Governments are investing in EV expansion out of concerns over the environment, to boost industrial policy and decrease dependency on oil.
Demand for oil will fall by 5 million barrels a day by 2030 because of the EV transition, IEA executive director Fatih Birol said.
