June 06, 2010
China To Subsidize Electric Cars

Government incentives for electric cars in China will be slightly larger than similar $7500 per electric car subsidies in the United States.

According to Xinhua, the official Chinese news agency, consumers in those urban areas will be able to get up to around $8,785 off the price of a battery car and about $7,320 off plug-in hybrids. The money will be paid directly to carmakers, which will reduce the vehicle price accordingly, the government said.

Since China's car market is now bigger than the US car market (yes, more cars are sold per year in China than in the United States) this incentive represents a large increase of incentives for development of better electric car batteries.

One of the biggest questions in my mind about Peak Oil is whether we will get the needed technologies in time to adjust to declining global oil production without an economic depression. I'm still undecided on the matter. One key question is on electric car battery costs. The optimistic camp holds that lithium batteries will drop rapidly in price. Well, maybe.

Subsidies for pluggable hybrid electric vehicles (PHEVs, e.g. the Chevy Volt) and pure electric vehicles (EVs, e.g. Nissan Leaf) create incentives for companies to develop new battery technologies sooner than would be the case if the market only reacts to oil prices alone. But how rapidly can these now many competing battery companies find new ways to cut costs? Any readers understand what the main strategies are for cutting lithium battery costs and what are the major cost factors for lithium batteries? The cost of the lithium so far does not appear to be a large portion of the cost. So why are the batteries so expensive?

Share |      Randall Parker, 2010 June 06 08:40 AM  Energy Electric Cars


Comments
Nick G said at June 6, 2010 12:10 PM:

I have the impression that the dominant li-ion manufacturing technology is...Chinese women manually wrapping each of many layers for each cell.

Obviously this would present a large opportunity for automation.

Chris T said at June 6, 2010 3:53 PM:

China could do far better if they simply stop fixing the price of oil.

Fat Man said at June 6, 2010 8:09 PM:

"The cost of the lithium so far does not appear to be a large portion of the cost. So why are the batteries so expensive?"

" ... lithium-ion batteries will need to hold 40kwh of energy before electric-only vehicles are ready for mass commercialization. ... a mass-market electric car will require 124 pounds of lithium carbonate."
http://www.forbes.com/forbes/2008/1124/034.html

"The average customs unit value for imported lithium carbonate was $4.44 per kilogram, about 26% higher than in 2007,"
http://minerals.usgs.gov/minerals/pubs/commodity/lithium/myb1-2008-lithi.pdf

So, that would be about $250 for the Li. But, that is only one raw material. Batteries may also use elements such as cobalt which can cost $30 -- $50/lb.
http://minerals.usgs.gov/minerals/pubs/commodity/cobalt/myb1-2008-cobal.pdf

Beyond that, the batteries must be manufactured in cells, because the voltage of a single cell is limited by the electrochemistry, and mounted in series, so that reasonable operating voltages can be obtained. Further, there must be a cooling system because the batteries get hot both when charged and when discharged. I just don't see where there will be enormous cost savings in the manufacturing process. Finally, if there were to be enormous increases in demand for these things, raw materials prices could go through the roof.

LoboSolo said at June 7, 2010 10:20 AM:

Methanol is a faster way to liquid energy independence and it doesn't require a subsidy.

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