UBS: Triple-Parity for EVs Becoming a Reality
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UBS suggests electric vehicles are rapidly approaching triple-parity with internal combustion engine vehicles across powertrain cost, driving range, and charging time. Based on detailed teardowns of five latest-generation battery cells from CATL, Tesla, and GM/LGES, the report highlights that CATL's Shenxing battery achieved a full pack cost of $55 per kWh, marking a roughly 50% reduction compared to the Volkswagen ID.3 cell dissected in 2020. UBS expects this cost reduction trend of approximately 10% annually to persist.
Globally, UBS adjusted its battery demand forecasts, trimming 2026-2028 estimates by 1-4% while raising 2029-2030 projections by 2-5%. Demand is now projected to reach 7.1 TWh by 2035, reflecting a 17% compound annual growth rate. Short-term headwinds stem from a higher-than-expected PHEV share in China and policy shifts in the United States. The repeal of the $7,500 consumer tax credit under the OBBBA legislation is expected to pull US EV penetration down to 7% in 2026.
CATL's LFP cells currently hold a 15-30% cost advantage over NCM/A equivalents. This structural edge is accelerating LFP adoption, projected to capture 83% of the global market by 2035. Furthermore, UBS raised its battery energy storage system (BESS) outlook, forecasting global installations of 3 TWh by 2035. UBS identifies LG Energy Solution and CATL as its top battery picks, while advising a Sell on Posco Future M and Ecopro BM.