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There is a growing interest in electric vehicles due to environmental concerns. Concerning the environment, EVs can provide emission-free transportation. Even taking into account the emissions from the power plants needed to fuel the vehicles, the use of EVs can still significantly reduce global air pollution. Recent efforts are directed toward developing an improved main component systems for the electric vehicle applications. Soon after the introduction of electric starter for internal combustion engine early this century, despite being high-energy efficient and nonpolluting, electric vehicle lost the battle completely to internal combustion engine due to its limited range and inferior performance. But, electric vehicles offer the most promising solutions to reduce the emission of vehicles. This paper describes a method for cost reduction estimation of electric vehicle (battery electric vehicle and hybrid electric vehicle). We used a cost reduction structure that consisted of five major subsystems for electric vehicle. Especially, we estimated the potential for cost reductions in electric vehicle as a function of time using the learning curve. Also, we estimated the potentials of cost by depreciation.