August 08, 2010
Electric Car Battery Price Declines Expected

Electric Vehicle (EV) viability depends on a big decline in battery prices. An approximate halving of prices in 5 years?

Prices could drop to between $350 and $400 a kilowatt-hour in five years, according to a projection from Ron Iacobelli, chief technology officer at Azure Dynamics, a supplier of drive technology for commercial electric and hybrid vehicles.

Anyone reading this in a position to judge the likelihood of such a price drop? Will the price of EV batteries fall in half in 5 years?

The price point to allow EVs to compete against conventional gasoline-powered cars is reported by the article as somewhere around $300 per kilowatt-hour. To put that in perspective, that's enough battery capacity to push a compact car about 4 miles. So at that price point we are still talking about $12k to get 120 miles of range. My guess is that electric cars will mostly have lower ranges and be used mainly for commuting. EVs won't be road tripping cars.

Of course if Charlie Maxwell is right about $300 per barrel oil by 2020 then EVs will become competitive much sooner.

The future path for the price of oil depends on two main factors: A) How fast will oil production decline? B) How fast will substitutes fall in price? These are hard questions to answer.

Does anyone a good rule of thumb for converting oil prices to gasoline prices at the pump? An oil barrel has 42 gallons. But not all the contents of the oil are useful for making gasoline. Also, the refining process has labor, capital, and energy inputs, plus transportation and marketing costs, not all of which vary proportionately with the price of oil. So how does the retail cost of liquid transportation fuels go up with the price of oil?

I am struck by the $33k price for Nissan Leaf EV and the $41k price for the Chevy Volt PHEV (pluggable hybrid electric vehicle). I do not expect the Leaf with a 100 mile range battery to cost so much less than the Volt with a 40 mile range battery. Batteries cost too much for that to be the case. So is Nissan subsidizing the Leaf more more than GM is subsidizing the Volt? What's the real total parts cost of the Leaf versus the Volt? Has anyone seen a good detailed comparison of their parts costs?

Share |      Randall Parker, 2010 August 08 08:11 AM  Energy Electric Cars


Comments
Fat Man said at August 8, 2010 10:46 PM:

Sure it could happen. But, why? What is going to make battery costs come down? It is not as if batteries were a new invention. They aren't they are more than 200 years old. That is old technology.

Color me very skeptical.

mattbg said at August 9, 2010 5:43 AM:

The situation with EVs is strange.

With lifespan limitations on the battery itself, it's a fixed cost for an asset that will depreciate and deteriorate whether you use it or not. In the case of the Leaf, you may be leasing the battery rather than owning it.

It therefore becomes the most cost effective when you use it a lot. But you can't use it a lot -- you are limited by range and charge time.

I'm sure there are people for whom the EV will fill a need, but it seems like these cars are best for people that should perhaps be disuaded from needing a car at all -- i.e. city dwellers

There is hardly any real-world information about how stop-and-go traffic affects the battery life of these things, and the use of things like air conditioning (especially combined with stop-and-go traffic in summer, which is when AC is most useful) and extra passengers, less-than-flat terrain, etc.

It seems entirely plausible to me that someone could buy one of these for a 60-mile roundtrip commute and then end up running out of juice in a summer traffic jam on the way home from work... especially in the 3rd and 4th year when the battery is deteriorating. A few of those stories will probably kill the concept.

I like the idea of EVs because you can generate electricity from so many different sources... but the storage problem is a major issue. If someone "cracks" it, they'll have done us a huge service.

castle1925 said at August 9, 2010 6:32 AM:

mattbg, you've made several statements that defy logic:
1) The battery pack on the Leaf and Volt are both warranted for 100,000 miles, so your "depreciation and deterioration" is really not an issue. After 10 years, the batteries are expected have 70-80% capacity, and considering the motors and batteries are zero-maintenance, I would say this beats the "depreciation and deterioration" of a gas motor.
2) Your assumption that you can't use an electric car a lot due to limited range is the same thing as saying you can't drink much beer if you are limited to 12-oz cans.
3) Stop-and-go-traffic and AC load has no more detrimental effect on EVs than on gas vehicles. I speak from personal experience.
4) You're blaming the car if a person runs out of charge on a 60-mile round trip (120 miles). Surely they would know the car they researched and bought has a 100-mile range and would have the good sense to top off at work.
5) The storage issue has already been "cracked" as you put it: lithium.

mattbg said at August 9, 2010 8:52 AM:

castle1925, those are interesting points but you seem to be stretching to make the idea work. Also, they don't defy logic -- they are a different intepretation of an uncertain future:

1. What does "warrantied" mean? That they will continue to hold any charge at all for 10 years? That they will hold 70% charge after 10 years? It surely can't guarantee a certain range for 10 years because range itself depends on conditions, so there needs to be more information to make that claim meaningful. I don't care if the battery is warrantied to hold a charge for 10 years if I can only go half my original range after 5 years.

2. Without charging stations or some type of drop-in battery replacement, you are limited by range and then the amount of time it takes to replenish the charge. I don't see a way around that. Still, 100 miles a day is a lot of miles -- 36,500 miles a year, which is probably more than most people use. But you are limited to consuming it in rationed, daytight compartments. To use your analogy, you can drink 365L of beer in a year, but only 1L per day.

There are some other concerns, too -- the EV offers most benefit to the environment when it's used in stop-and-go city traffic, but people would not be covering a lot of ground in these conditions. Gasoline engines are not that bad in free-flowing highway conditions.

3. That wasn't my point. My point is that you're trapped into a 100 mile range with EVs, and that is presumably under ideal conditions. Adding the load of stop-and-go and AC reduces that range, and there is no fast way out of the problem -- no charging stations, no siphoning gas from another car to help you on your way. The much larger range of gasoline-based cars, and abundance of gas stations gives you much more room for error.

4. I meant a 60-mile roundtrip as in 30 miles each way. So, 60 miles total.

5. Lithium? Are you talking about the rather scarce resource that gives notebook batteries their infamous 3-years-from-manufacturing life, after which they start to rapidly deteriorate in storage capacity?

I think there are ways to deal with the range. Some people may find it worth the tradeoff. Charging at work would help, but it remains to be seen whether this will be adopted. Fast-charging stations will help, but they still take a long time compared to filling up with gas. Drop-in battery replacements may work, but you are dealing with a 400+lb. battery.

But, I still think this is a car that will work best for city-dwellers, and even then would be even better as a car-sharing option -- city-dwellers are the most able to do without a car at all, and need to drive the least. Who knows, though? It's hard to predict how people will react to things.

GM had the right idea with the Volt... I'm not sure what'll become of Leaf-type vehicles. It'll be interesting to see.

Among the cows in Iowa said at August 9, 2010 9:48 AM:

Adding the load of stop-and-go and AC reduces that range

Electrics and hybrids usually do better in stop-and-go. They pay a smaller penalty for AC. Electric AC is more efficient.

What does "warrantied" mean? That they will continue to hold any charge at all for 10 years? That they will hold 70% charge after 10 years?

Not paying attention to contrary facts does not make you right. Just tedious.

mattbg said at August 9, 2010 10:07 AM:

cows in Iowa,

Tedious?

Your reply is not very useful.

It doesn't matter if EVs do better in stop-and-go or that AC is more efficient. How is that relevant? What I care about is how much stop-and-go traffic and AC reduces my charge and whether it will be detrimental to my use of the thing. It will not be free, so it will have an effect.

A claim that a battery is warrantied for 100,000 miles is meaningless to me. All it says to me is that the battery will, within 8 years, provide enough electricity to travel 100,000 miles. But to be useful I need it to give me a certain number of miles per day. Likewise, it may be warrantied for 8 years, but if it's only giving me 30 miles a day by the 8th year then it's useless to me if I bought it for a 60-mile commute.

You want it to work. Fine. So do I. But let's not make believe. You and I probably both have experience with lithium ion batteries. We know they are not normally in good shape even after 5 years. They do better or worse depending on how fully charged they are when stored. They do better or worse depending on ambient temperature. The Leaf will have no active thermal management.

If you disagree with this, I'll put you in the same box as an ex-roommate of mine who, when confronted with the requirement of charging his notebook battery for 6 hours before use, asked, "why can't they just make a battery than doesn't need to be charged up before using it?".

cthorm said at August 9, 2010 11:20 AM:

I haven't seen anyone do a detailed cost breakdown of either vehicle, nor do I think the information is that readily available to really do a credible analysis. As far as the price difference, I highly doubt Nissan is cross-subsidizing the Leaf anymore than GM is for the Volt. If anything, it's the opposite. As far as costs go, one of the big reasons for the markup in the Volt is likely GM's union-heavy workforce, who are commonly paid 50-100% more than their non-union counterparts, and that's within the US. Also, hybrids like the Volt are mechanically more complex than a straight EV like the Leaf: you're also getting a 1.3L gas engine, the DC generator mechanism etc. As far as batteries go, I'm fairly certain they are functionally equivalent. However, in 5 to 10 years, when you would need a replacement battery, there is a high likelihood you'll be using some alternative chemistry, probably a bank of metal air batteries.

Randall Parker said at August 9, 2010 7:09 PM:

mattbg,

Regards EV range: Well, if you go only 30 miles each way then a Leaf works even after its battery has deteriorated 70%. You'll have several years to drive before it deteriorates that far and by then I would expect battery costs to be considerably lower. So by then you could add an extra battery or replace the existing batteries with new ones that offer even higher range.

If you can recharge at work then the Leaf is good for much longer commutes. Though few people have such long commutes.

But if you want to doubt the practicality of EVs then here's real evidence of Nissan Leaf drive ranges:

  • 138 miles while cruising at 38 miles an hour with an outside temperature of 68 degrees Fahrenheit;
  • 105 miles at a fairly steady 24 mph in city traffic with the air conditioner off and an ambient temperature of 77;
  • 70 miles at a steady 55 mph on the highway on a hot 95-degree day with the air conditioning on;
  • 62 miles in the winter - 14 degrees outdoors - with heater on and stop-and-go traffic reduced to an average 15 mph crawl.
Note that these results suggest that in the summer the Leaf will have a longer range in the morning than in the afternoon after work. So that 70 mile 95F range isn't really as bad as it sounds. But severe cold does more to degrade range.

This car would work very well all year round in US West Coast communities that do not get very hot or very cold. It'd work well in Santa Barbara, Pismo Beach, Monterrey, Tacoma, Seattle, or Vancouver BC Canada.

But if your commute is only 30 miles each way you are going to be hard pressed to run out of electricity in the winter even commuting into Minneapolis.

Bottom line: You have to figure out your worst case commute and whether the car will work for you.

Randall Parker said at August 9, 2010 7:27 PM:

mattbg,

Here's additonal reason to be skeptical of published EV ranges. Makes the case for PHEV Chevy Volt more compelling.

But if you happen have a more ideal commute (e.g. Ventura to Santa Barbara up the cool Pacific coast) then an EV could work very well. Ditto if you have the ability to recharge while at work. Ditto if your commute round-trip is less than half the 100 mile claimed Nissan Leaf range.

In a nutshell: EV range depends on a lot of factors and so you've got to look at your own situation before buying. I expect a lot more driving range data will get published once the Leaf has been on sale for several months and lots of people have published their own range data.

Randall Parker said at August 9, 2010 7:30 PM:

Another thought about EVs: They are more workable for people who have an extra car. You can switch to the ICE car when you need it.

Given that the Volt costs $8k more than the Leaf and given that you can get a decent used car for less than $8k that's another way to go.

Sione said at August 9, 2010 9:49 PM:

Randall

"Another thought about EVs: They are more workable for people who have an extra car. You can switch to the ICE car when you need it."

I think that makes the argument go in favour of a hybrid.

Or it might be an argument to get two decent used ICE cars and save the rest of your money for something else.

Sione

mattbg said at August 10, 2010 5:34 AM:

Randall,

Thanks, that's really useful information and it's good to see some specifics.

It's a lot more analysis than most people are used to doing for a car purchase, I think -- figuring out if the car will give you enough range to drive in your worst-case scenario.

One of my concerns is that, if this thing isn't stage-managed properly, there'll be a stream of bad news stories about the whole EV concept and it'll be dead once again.

I completely agree that they're an ideal second car. If you have a choice about which one to use for which purpose, it'd be ideal.

BBM said at August 10, 2010 12:09 PM:

Lets not forget that the lease numbers are about the same for the Leaf and Volt.

For an equivalent lease, I'd go with the Volt.

theBuckWheat said at August 11, 2010 5:56 AM:

The price of oil has VERY LITTLE to do with the price of finished fuel products, that is if the free market is allowed to operate. That is because our fuels (gasoline, diesel, Jet-A, etc.) are presently manufactured in a refinery by disassembling the hydrocarbon molecules in crude oil and then reassembling them to form a product with the desired characteristics. But in reality, these hydrocarbons could come from anywhere. The issue is mainly the cost of the raw source and the cost of building and running the conversion process.

Recall that the Germans ran a substantial part of their military machinery by converting coal. This process was later used in South Africa. Over the years the process has been improved and today can be used to make finished diesel fuel at a break-even price of about $75/bbl. The world price of crude oil is slightly above that number right now.

Our world is almost awash in hydrocarbons that can serve as the raw feedstock source of hydrocarbon molecules from which to make the fuels we need. The US is the "Saudi Arabia" of coal and has hundreds of years of supply. We also can convert agricultural wastes and even sewage sludge.

If the market is allowed to adapt, there is no reason (except inflation) that the price of fuels should be substantially higher in the future than they are now.

Nick G said at August 11, 2010 12:50 PM:

theBuckWheat,

Coal-to-liquid plants seems to be very large, $5-$10B. On that scale, planning and construction risks become very important. When planning and construction risks are very important, investors care very much about public policy, and political barriers. They tested public policy recently by asking for loan guarantees, which were turned down. That sent a strong signal to investors not to pursue CTL. For the moment, CTL seems to be pretty dead in the US.

Kent Gatewood said at August 13, 2010 8:04 AM:

At $300 a barrel: 150 bushels of corn per acre, 2.5 gals of ethanol per bushel, ethanol = .67 gals of gasoline, 250 +/-gals of gasoline equiv per acre, 250/42 = 5.95 barrels per acre, $300 * 5.95 = $1785 value of end product produced by an acre of corn.

I don't know the other costs associated with the process (and don't how much ethanol is lost before it gets to the pump), but wouldn't a massive number of landowners switch to growing crops for fuel?

Randall Parker said at August 13, 2010 8:19 PM:

Kent Gatewood,

Some researchers have calculated that corn ethanol has an Energy Return On Energy Invested of about 1.3. So the net gain isn't huge. Plus, there's a limited amount of land that is good for corn. The land not currently in production would have lower yields.

We can tell corn ethanol isn't competitive because it requires a big federal tax credit plus a federal regulatory requirement to boost use of the ethanol in fuel. Corn ethanol market share appears to have hit a ceiling.

As for the economics of corn ethanol: It depends in part on the ratio of cost per BTU of oil and natural gas. Nitrogen fertilizer is made using natural gas as the source of hydrogen to reduce nitrogen. Currently the ratio of oil to natural gas cost is higher than the historical average. That improves the economics of corn ethanol. If the ratio declines then the economics will get worse.

Oil is also an input to farming to power tractors, haul supplies, and haul crops (including crops hauled to corn ethanol plants).

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