November 11, 2012
Efforts To Cut Electric Car Battery Costs

With the Nissan Leaf's battery cost at $12,000 per car blocking mass acceptance of electric vehicles (EVs) what are the prospects for cheaper batteries? Kevin Bullis of Technology Review looks at prospects for lower EV battery costs.

The cost for the Leaf battery could drop to under $4,000 by 2025, according to a recent study by McKinsey, just by increasing the scale of battery production, forcing down component costs through competition, and approximately doubling the energy density of batteries, which reduces materials costs.

He also looks at efforts by GM, Toyota, and others to achieve bigger cost reductions with incremental and more radical advances.

A recent JD Power survey of current and potential electric vehicle (EV) owners find that while early adopters were happy to buy EVs for environmental reasons the masses want lower costs and better driving range before they take the plunge.

According to the inaugural study, the top three reasons potential EV buyers reject this type of vehicle are price, vehicle size and reliability. Consumers also express concern about driving range and the availability of charging stations away from home.

"Current EV owners focus on the emotional benefits of owning an electric vehicle--which are having positive effect on the environment--but the way for manufacturers to take EVs to the masses and increase sales is to address the economic equation," said Neal Oddes, senior director of the green practice at J.D. Power and Associates. "There still is a disconnect between the reality of the cost of an EV and the cost savings that consumers want to achieve."

I do not see EVs like the Leaf or pluggable hybrids (PHEVs) like the Chevy Volt taking off until battery costs come way down. Look at Europe where gasoline in many countries is $7 per gallon or more. EVs aren't taking off there. Conventional hybrids will become dominant years before EVs do.

Since I'm expecting higher oil prices the prospects for HEVs look good and I think we'll see a point where HEVs come to make up half the cars sold. The HEV battery volume will provide the revenues needed to fun even cheaper batteries and so we will get to EVs as a result of going thru a lengthy HEV period. Ford's shift to lithium ion batteries for the Fusion Hybrid indicates that HEV sales will provide the revenue needed for lithium ion battery advances and cost reductions.

Share |      Randall Parker, 2012 November 11 01:21 PM 


Comments
PacRim Jim said at November 11, 2012 10:04 PM:

The cost of a battery cannot be reduced as fast as can the income of potential consumers by inept politicians.

Ronald Brak said at November 13, 2012 2:22 AM:

I see that Nissan has sold over 42,700 electric Leafs. Is that good or bad? I have no idea. The article I got the number from seems to think its good, but I'm not about to trust them. I see sales in the US haven't been so good, but then the US is the land of astoundingly cheap gasoline. And of course the lousy economy not only means a lot of people can't buy new cars, but also makes them less adventurous. If the world economy was better I'm guessing we'd see higher oil prices and more sales. But one thing seems clear, the couple of models that are available now are first adopter cars. If taxis, company car fleets, and delivery vans start going electric to save on fuel and maintenance, then we'll know that electrics are competeing on cost rather than coolness.

Randall Parker said at November 13, 2012 7:22 PM:

Ronald,

In a world where yearly global car sales are well over 50 million the Leaf sales are less than one tenth of one percent of total car sales.

Wolf-Dog said at November 13, 2012 9:04 PM:

So far the annual amount of money spent for academic research has been modest overall. We need to spend tens of billions per year for this endeavor. How can we lobby the government for this purpose?

Ronald Brak said at November 13, 2012 9:56 PM:

Electric car sales are of course only a teeny weeny portion of total car sales. It really couldn't be any other way as electric car manufacturing capacity is only a teeny weeny portion of total world car manufacturing capacity. Anyone who expected huge volumes of electric cars to be sold this year obviously didn't count the number of factories able to build them. But I was wondering if Leaf sales were good or bad from the point of view of Nissan. Is their Leaf assembly line running at below capacity, or are they happy with how many units they're selling? Looking into it further, I see that their sales are currently well below target. I'm also surprised to see that the US, which should be about the worst sales area outside of some middle-eastern countries because of low gasoline prices, is their second largest market after Japan. I guess there are a lot of first adopters in the US, but apparently not nearly as many as Nissin hoped. After checking to see if the Leaf is available in Australia, I see it costs $51,500 here, or about $54,000 US. And I see that its price in Europe is comparable. I think I've solved the mystery of why the Leaf isn't selling well. It's a luxury item for rich first adopters. They should let me know when they have a model that taxi companies are interested in or a work van that the business up the road would want.

Randall Parker said at November 14, 2012 9:34 PM:

From the point of view of Nissan: I think Leaf sales have got to be bad. They spent a lot of money on Leaf development and the low sales means they have fewer buyers over which to spread development costs.

The number of factories able to build EVs isn't really an issue. Battery prices are the issue.

US as large market: Makes sense though. To sell a car that costs too much you need a lot of people with money to burn who will buy a car for emotional reasons. America's got enough upper middle class and upper class people who can shell out the money and who think they are doing good by buying a Leaf. Nissan's problem is that most of those upper class people have lots of other ways to spend money to feel good about their environmental commitment. e.g. buy a Tesla or get a Prius (which actually makes economic sense) or install a ground sink heat pump and insulate their house (which again makes economic sense).

Engineer-Poet said at November 15, 2012 4:31 PM:

If the talk about graphene-silicon anodes for Li-ion cells becomes reality, the battery price problem will be solved in the next few years.

We've seen disruptive improvements like this in technologies like disk drives.  Given the number of different electrodes with similar potential benefits, one of them is going to get to market and it only takes one.

Wolf-Dog said at November 15, 2012 9:15 PM:

Engineer-Poet, the website GreenCarCongress.com that you are quoting is constantly being updated with new developments in battery research:

http://www.greencarcongress.com/batteries/index.html

But the most astounding "development" is the fact that all this progress is being done with so little government grants. The government is throwing a few millions here and there and bragging about it. If 25 % of the money that we spent in the wars in the Middle East, were spent in battery research since 2001, we would have some serious breakthroughs already.

Ronald Brak said at November 15, 2012 10:07 PM:

Cheaper batteries are very important, but what would also help is if electric cars cost as much as a gasoline car plus batteries. A Leaf sized car is about $14,000 here in Australia. If the Leaf battery pack is $12,000 then car plus batteries would come to $26,000 or half the price the Leaf is currently being sold for in Australia.

Wolf-Dog said at November 16, 2012 1:11 AM:

Actually, a pure electric car without battery can be made for $12,000 because the electric motor is cheap (in mass production) and such a car would have very few components compared to a gasoline car.

Furthermore, a pure electric car without battery would last at least twice as many years much as a gasoline car because it has very few components that need to be replaced (no transmission since all wheels would get their independent motors, no exhaust, no complex cooling mechanism, no engine oil, no transmission oil, no radiator, etc). The electric motors get swapped very easily. Thus the long term driving cost of an electric car (without battery) would be much lower than a gasoline car once you take into account the longevity of the electric car.

To be sure, it will take another decade for electric cars to become competitive.

Another thing to consider is the business model of Better Place Company (which may go bankrupt due to lack of funds, but it is still a good idea.) This business model separates the battery from the car so that the electric company would own the battery and the car owner rents the battery annually. In this business model, if the battery lasts 10 years, the current battery price of $12,000 divided by 10 years would be $1,200 per year, to be added to the annual cost of electricity to drive the car during the year. This calculation would make the car more economical to drive, making it competitive with gasoline. For example, if each person drives 10,000 miles per year with fuel economy of 35 miles per gallon, this would burn 285 gallons of gasoline per year. If the price of gasoline in many European countries such as UK and France is as high as the current 1.6 euros per liter, this would be like $2 US dollars per liter, or $8 US dollars per gallon. Now at this price the cost of driving 10,000 miles per year at 35 miles per gallon would be $2,280. However, the equivalent efficiency of an electric car at the current prices would be similar to 100 miles per gallon, meaning that the cost of electricity for driving an electric car for 10,000 miles per year would be like $800 per year. Now let us add the annual cost of electricity to the annual cost of owning the battery, and the corresponding figure is $800 + $1,200 = $2,000 per year. Thus if we separate the battery from the electric car and combine the annual cost of owning the battery with the cost of electricity, you would need $2,000 per year to operate the car. Thus even at $12,000 per battery, if such a battery lasts 10 years, the cost is competitive with gasoline at the current prices of gasoline in Europe. If the US had the same taxes on electric cars, the same would be true here.

Thus it is strange that a Nissan Leaf even without battery is still very expensive, but in principle a bare bone electric car without battery can be made even cheaper than a corresponding gasoline car because it has a lot less components and it is simpler to manufacture once in mass production. So far Nissan Leaf is not yet mass produced like the gasoline cars, and the components are not yet standardized.

Thus once the price of batteries is brought under control, things will change dramatically.

Ronald Brak said at November 16, 2012 6:30 PM:

There a couple of things at work making electric cars more attractive in Australia. The first is renewable energy is pushing down electricity prices. I'm getting an 8.1% cut in what I pay per kilowatt-hour starting New Years Day due to my state's wind and solar capacity. Another factor is that feed in tariffs for solar are being slashed. This means that people producing excess solar electricity might only be able to export it to the grid for six cents or eights cents or even zero cents a kilowatt-hour. (Yes, there are people in Australia supplying solar electricity to the grid and getting nothing for it while at the same time we pay people to burn coal to produce electricity.) This means that it will basically cost some people nothing to dump surplus solar electricity into an electric car battery pack. And even if they can only manage to do this some of the time, it will still lower the overall cost of running an electric car.

Ronald Brak said at November 27, 2012 6:49 AM:

The leaf is even less suitable than I thought for Europeans and Australians. It turns out the car is designed only for US/Japan electricity and can be plugged into a normal socket in those countries, but it can't accept European/Australian electrical power without a special $2,750 adaptor. This is lousy because our heftier household power would otherwise eliminate the need for a special charger, as it's more than sufficient to completely charge a leaf overnight. Obviously they are not seriously trying to market them in Europe or Australia.

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