January 07, 2010
Battery Costs For Electric Cars Versus Prius

A much debated topic in the comments section of FuturePundit posts on energy is the current price and future prices for pluggable hybrid electric vehicles (PHEVs) and pure electric vehicles (EVs). A Bloomberg article about the future of Nissan and Renault sheds some light on the economics of EV batteries. The forthcoming Nissan Leaf pure EV compact car will go 100 miles per charge.

Ghosn’s first electric car, the Leaf, can travel only 100 miles (160 kilometers) without recharging -- putting him in competition with hybrid vehicles that have no such limits.

The car will be sold without a battery which will be leased. But what's the cost of the battery? Would you believe over $15k?

For Rod Lache, a Deutsche Bank AG analyst in New York, the cost of electric vehicles’ battery packs is a major constraint. A pack as big as the Leaf’s costs $15,600, Lache says. That compares with about $30 for a gas tank in conventional cars that travel four times farther.

How much fuel does that battery pack need to save you in order to make it worth your while? The answer depends heavily on the future prices of oil and gasoline.

The future of the electric car depends heavily on how fast battery prices fall.

Lache predicts that high-volume manufacturing will cut battery costs -- now $650 per kilowatt-hour -- in half by 2020. Ghosn says costs will fall faster.

Imagine you bought the battery with a loan over a period of 10 years. I am assuming 10 years as a useful life just for the sake of argument. I used an online mortgage calculator, put in a loan for $15,600, 7.5% interest rate (interest rates are higher on cars than on mortgages), and 10 years. The monthly payment is $185. If you aren't spending more than that per month on gasoline for a compact car then the battery isn't going to save you money. You are welcome to use other assumptions, plug them into a mortgage calculator, and post the results in the comments.

Note that the Leaf will be a compact. You can instead get a moderately larger (or the same size?) Toyota Prius for less than or equal to the expected $25,000 to $30,000 price for the Leaf. The Prius is probably good for 50 mpg. If you drive, say, 1000 miles per month that is 20 gallons per month. Suppose world oil production starts declining and gasoline shoots up to shocking price of $10 per gallon. That Prius will cost you only $200 per month in gasoline, will have a longer range than the Leaf, and more room. Plus, the Leaf's electric recharge for 1000 miles will probably run you at least 250 kwh which will likely cost you $25 or so (depending on where you live and time of day).

I cut the interest rate on the battery purchase to only 5.5% and came up with $169.30 per month. A Prius is still a better deal at $8 per gallon for gasoline.

Questions remain: Did Rod Lache come up with a realistic price for the Leaf's battery? How long will the battery last? Will it last 120,000 miles in 10 years of use? How long will it take for gasoline to hit the price points where an EV starts to make sense?

I see a more compelling case for a PHEV like the Chevy Volt. GM can use a smaller battery because they are shooting for a 40 mile range on electric power with the rest of the range coming from a gasoline engine.

Share |      Randall Parker, 2010 January 07 06:32 PM  Energy Electric Cars


Comments
Rick said at January 8, 2010 8:31 AM:

It is interesting to calculate the gasoline price point at which the total cost of ownership of a Prius is equal to a Corolla. When I did this calculation in July 2008 ($4+/gallon) gas had to be over $7 gallon before it made sense.

LL said at January 8, 2010 9:28 AM:

Rick,

That is a good point. In fact that is what Honda was counting on when it created the current Insight. It is a weaker hybrid, but it cost less so the overall economics of it is better than the Prius that gets the better MPG.

LL

Michael G.R. said at January 8, 2010 10:26 AM:

It is extremely useful to do the math, but we must also remember that people buy cars for many reasons, and saving money often isn't near the top of the list (otherwise everybody would have south-Korean sub-compacts).

When someone pays extra for a bigger engine, sporty styling or a moonroof, they aren't expecting to save money vs the model with the smaller engine or with less luxury features. They're doing it because in some manner it gives them something they want.

I think that spending more money for a hybrid, PHEV, or EV can fall in the same category, at least when it comes to early adopters (and at some point, the technology will probably have progressed enough that these cars can go mainstream).

John L. Sokol said at January 8, 2010 12:12 PM:

I am telling ya, supercaps will win. There is a stem for bussed now where they can recharge at each stop.
http://thegreentank.blogspot.com/2009/10/ultracapacitor-bus-recharges-at-each.html

I can easily see highways and roads with spots that can recharge cars as they are driving.
They can be every few feet or even every few miles along the road, maybe make a special lane for them. Dynamic mircopayments can be done for charging for the electricity sold and it can be supply from solar along road side or off the grid.

See a story I wrote with my vision for this.
http://johnsokol.blogspot.com/2009/11/apple-part-1.html

Nick G said at January 8, 2010 2:38 PM:

This article cites the NRC study. Articles like this, that cite both the NRC study and Lache, suggest to me that's where Lache got his figure. We debunked that study .

no i don't said at January 8, 2010 3:30 PM:

Eventually gas cars will be obsolete. In the future people will be amazed at how long we continued using petrol cars while also having the alternative technology available.

EV cars make sense. Solar cars... hey, even better for some regions.

Nick G said at January 8, 2010 4:10 PM:

In the future people will be amazed at how long we continued using petrol cars

I agree. When gasoline first arrived, it was much cheaper than electric transportation. Now gas is more expensive, batteries are cheaper (and will only get more so), and there are very large external costs for oil. $2T for Iraq, how many $100B's for homeland security??

Heck, just having to watch the torrent of bad movies and television with plots based on terrorism is a large enough cost to make me want to buy an EV.

Bob Badour said at January 8, 2010 4:23 PM:

There really have been surprisingly few terrorism movies. Contrast with the cold war movies we got in the 80's.

Nick G said at January 8, 2010 4:35 PM:

I think if you expand your definition a little, you'll find an enormous number.

You see, I'm not really concerned about the cheesy Rambo-type movies, or 24. I'm more concerned about the culture of fear that's been created by our "war on terror". The enormous number of police-procedurals, like CSI, in which heroes in blue are protecting us from serial killers are, I think, a symptom of this. Ghost-whisperer, Medium, and other stories of supernatural heroes protecting us from supernatural evil are another.

Similarly, people are buying SUVs to feel safe. These are all symptoms of widespread diffuse anxiety.

Bruce said at January 8, 2010 5:55 PM:

"the culture of fear "

On 9/11 terrorists attempted to kill 100,000 people. 25,000 in each of the towers and 50,000 in the Pentagon. More if you count visitors and nearby buildings.

Please do not minimize it.

I already think you are an idiot. Please don't make it worse.

Randall Parker said at January 8, 2010 6:02 PM:

Nick G,

Even after this post I expected you to continue disagreeing the higher cost for batteries. But I have yet another study to show you in my next post. The numbers are not favorable for your more optimistic position. Let me know when you are willing to concede.

Nick G said at January 8, 2010 7:08 PM:

Bruce,

Would 9/11 have happened if the first Gulf War had not occurred? Would the first Gulf War have occurred if the OECD were not dependent on ME oil exports?

Nick G said at January 8, 2010 7:14 PM:

Randall,

I'm just looking at the evidence. The suppliers for the two major EV's, the Volt and the Leaf, both say that their cell costs are about $350/KWH. Further, as best I can tell, Li-ion batteries can be bought online for $350/KWH.

If they're available online for that price, isn't that mighty strong evidence?

Nick G said at January 8, 2010 7:25 PM:

“I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil”

Alan Greenspan, in his 2007 memoir.

Nick G said at January 8, 2010 7:32 PM:

Bruce,

Let me clarify - I wasn't minimizing terrorism, I was suggesting that it has very high costs, especially in terms of creating society-wide anxiety.

miles said at January 9, 2010 2:55 AM:

Great article by Randall here. "Nuts-n-bolts" posts in layman's terms are the ones that really let people know the possibilities in ways they can readily understand.


For the "green" folks reading this:

I honestly think something like the Volt will be the best thing in the near term future. I work less than 15 miles from my home. Guys (and gals), if I charge my battery on a Volt every night, I can go to work, come home, stop and run a couple of errands that take me less than 10 miles, and I'd never USE GAS at ALL. A mere 40-miles per charge could allow me to hardly ever use gasoline during the week (and on the weekends too usually). Hell, if companies could just make cars that got a mere 25 miles before they switched over to gas, can you IMAGINE how many less barrels of oil Americans would use if over 50% of them had such cars? Especially if recharging stations were built in large-employers parking lots that recharged these batteries?


How many of you drive over 25 miles one way to work? How many of you drive over 40 miles one way to work? We could probably cut our oil dependency by at least half. My personal usage would be in the neighborhood of 80%-less oil if something like the Volt (40 miles on a new charge) came down the pike. Im patriotic enough to want to buy something like that, especially if made by an American company by American people.

----------------------------------------------------------------------------
Lets build some nuclear plants to power them. I understand that China, Russia, and the United States are planning to try and gather some helium-3 from the moon's surface so we can have "fusion" electrical plants that simply make helium-2 from helium-3 with only a spare proton as a byproduct (not radioactive waste in other words). That would be wonderful. We dont have to go back to the stone age to be green, or get off buying oil shipped half way around the world.

th said at January 9, 2010 6:13 AM:

A more realistic number for electric rates in the future changes all of this, it won't not stay at ten cents, throw in cap and trade, no nuclear, no coal, wind and solar and everybody driving a battery car, electricity will go through the roof.

Bruce said at January 9, 2010 10:51 AM:

Nick G. You've made it worse.

Engineer-Poet said at January 9, 2010 8:02 PM:

A troll complaining about someone else making it worse is truly ironic.

Bruce said at January 10, 2010 3:49 PM:

EP, look up the word sockpuppet.

Engineer-Poet said at January 10, 2010 4:23 PM:

Would you be the sockpuppet, or th?

Jackie said at December 12, 2013 11:45 PM:

As another poster said; economy is not every consumer's concern. Some may want an EV for the novelty or because they find it unique and different from the more common hybrids or traditional cars.

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