Are Electric-Car Batteries Already at $250 Per kWh? Analyst Says Yes

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Are Electric-Car Batteries Already at $250 Per kWh? Analyst Says Yes

Nikki Gordon-Bloomfield

17 6,595 views Jun 20, 2012

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A123 Systems Employees Perform Quality Check on a Lithium-Ion Battery Pack [source: A123 Systems]

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How expensive are electric car battery packs?

It’s a topic of much discussion among electric car fans, and a closely guarded secret within the auto industry, but now an industry analyst has suggested that improved technology and economies of scale has lowed electric car battery pack costs to just $250 per kilowatt-hour of energy stored.

Wolfgang Bernhart, partner at Rolan Berger Strategy Consultants, explained to EVupdate that battery prices are already much lower than previous predictions had indicated.

In fact, Bernhart’s calculations show battery packs have already reached the kind of prices that Pike Research said wouldn’t happen until 2020.

“All our bottom up calculations, as well as the purchase prices that we hear from OEMs, leads us to a cost level of $250/kWh,” Bernhart explained. “That’s the price level we see in the market for 2015.”

Remember, however that this recent analysis concentrates on the cost of the actual battery cells themselves, not the cost of the associated battery management modules, wiring and casing.

Why refer to prices for 2015 as current? We’ll explain.

Tesla Motors - Model S lithium-ion battery pack

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Like many manufacturing industries, automakers have to prepare for new production volumes well in advance. Singing contracts in 2012 for projects due to start in 2015 or beyond is not uncommon.

It’s also worth noting that in 2015, global production volumes of electric cars should be much higher than they currently are. That rise in volume alone will significantly reduce battery price due to economies of scale.

Build smaller numbers of electric cars and the cost goes up, which explains why Ford CEO Alan Mulally recently disclosed that the battery packs in the low-volume 2012 Ford Focus Electric cost the firm between $522 and $600 per kilowatt-hour.

These, according to our industry sources, add approximately another 20 percent onto the cost of producing a finished battery pack.

We’re pleased to see that automakers are finally paying a lot less for lithium-ion battery packs, but have one tiny question to ask.

When will these lower costs be reflected in sticker prices?

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Comments (17)

James Davis Posted: 6/20/2012 5:19am PDT

"When will these lower costs be reflected in sticker prices?" I think Nissan has already answered that question for you. Their 2013 Leaf is going to cost a lot less. But of course, you wouldn't ask Nissan a question like that would you? You'd ask GM and get a date like: "The price of electrics will be lowered in 2050."

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John Posted: 6/20/2012 5:55am PDT

@James: We talk to Nissan quite regularly. The company's line thus far is that it isn't talking about prices yet for the 2013 Nissan Leaf built in the U.S.

If you have published info from reliable sources with statements from Nissan to the contrary, do please post those links here.

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Keith Ruddell Posted: 6/20/2012 7:07am PDT

@John, I have nothing from Nissan, but smart Canada has stated the fortwo ED will be available in the spring of 2013 starting at $26,990. That's $6k less than the i-MiEV is currently available for here in Canada.

I'm assuming that an ICE version of the i-MiEV would be similar in price to a Yaris, which the fortwo is slightly more expensive than. It would appear that lower costs are being reflected in the price of the 2013 smart fortwo.

I hope Nissan and Mitsubishi drop their 2013 prices by $6k or more to compete with smart.

http://www.thesmart.ca/products-electric-drive-questions-answers/8525c184-31e6-51dc-afc5-6ddd43e8a415

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James Davis Posted: 6/20/2012 8:31am PDT

I know you do John. I was just being nasty to GM because I'm still a little upset with them. I think I read it on this site where Nissan said that they were lowering the price on the 2013 Leaf. All the car sites usually have the same articles, or so close that you'd think they copied each other, so it is kinda hard to remember which site you read it on. I think I gave you a link once from SciAm about batteries and you deleted the comment.

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John Posted: 6/20/2012 9:55am PDT

@James: We only delete comments that (a) are personal attacks on individuals; (b) are cut & pasted from article to article; or (c) use inappropriate language. I'd be surprised if we deleted a SciAm article for any of those reasons, but don't recall the incident.

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jeffhre Posted: 6/20/2012 7:32pm PDT

Keith, if that is correct, these thing could actually look competitive in a few years. All those comments about the big screen TV model to market, value of subsidies and total cost of ownership may soon have some meaning after all.

Yep James Davis, I agree. Snarky comments based on a chip on a shoulder are always more interesting (and certainly not a waste of the readers time) to the community at large than facts, discoveries and discussions. Oops, I may have gotten that one completely bass ackwards. My bad.

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Gavin Posted: 6/20/2012 7:38am PDT

One university student I interviewed last week also said that batteries in testing have finally reached the 1 kilowatt per kilogram mark.
Obviously this is lab stuff (not real world yet) but with A123 making a battery that works effortlessly in freezing temperatures, the fantasy-like "Batteries of the future" we've all heard about are quite possibly just months away from production.

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Gavin Posted: 6/20/2012 7:39am PDT

(I meant 1 kilowatt hour per kilogram)

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John Posted: 6/20/2012 8:20am PDT

Current li ion battery types being used I consider, for all intents and purposes, to be obsolete, considering the huge advancements made by the university research team led by Grant Norton at WSU. Today's batteries are, in comparison, short lived, deteriorate excessively with age, are slow to recharge, are much too heavy and bulky. All this and battery prices at least three times cheaper than li ion can achieve, regardless of any advancements made in their manufacture. $250 per kWhr is twice the level cited by the DOE as necessary for widespread EV adoption. WSU's, which cost less to manufacture than current types, look to be available at a paltry $80 per kWhr, which reduces the cost of the 300 mile pack for the Model S from $44K to $7K+

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Martin Posted: 6/29/2012 3:16am PDT

They are only obsolete when you can buy actually but an alternative. Unfortunately, you can't and I won't be holding my breath waiting for these "wonder' batteries. Very little so-called 'break-through' technology is new. Most of it has been around for at least a couple of decades. Sadly, we have been messing about trying to make an appallingly bad system (ICEs) slightly less bad whilst we should have been R&D'ing all this battery tech. If we had, we'd have all been driving around in fabulously efficient and practical EVs years ago. Instead we're still addicted to oil, still paying (arguably) dangerous loons billions of dollars to slake that addiction and still poisoning our communities in the process.

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Chris O Posted: 6/20/2012 11:14am PDT

Of course battery cost is dropping way faster than suggested by many "experts"in the past. Nissan wouldn't have bet on batteries on the scale they did if they didn't expect battery cost to be low and Tesla is actually offering battery capacity at $400/KWH today retail which fits nicely with $250/KWH cost.

The message that battery prices are already at $250/KWH could be a tough sell though. People are almost indoctrinated to believe batteries are really expensive and price will only come down slow and suggesting something different is often considered a heresy in my experience.

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BWallace Posted: 6/20/2012 11:22am PDT

This sentence -

"These, according to our industry sources, add approximately another 20 percent onto the cost of producing a finished battery pack."

Out of place? Shouldn't it be after " associated battery management modules, wiring and casing."?

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fb_1559222512 Posted: 6/20/2012 11:26am PDT

Well, great news! The problem is perception. EVs are great but with today's limited charging network (which will take decades to build up), it is still NOT enough for most people (at least it is perceived that way). So, solutions such as Volt is a great start. Volt will increase the economy of scale for other electric cars and in the process provide people with familiarity with the technology without any anxiety. Not everyone is up to today's EV technology so having a gas engine backup will go a long to reduce that fear. Leaf is a great car. I would buy one if I didn't need 100 miles range on some of my trips.

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Martin Posted: 6/29/2012 3:27am PDT

Er, I don't think it will. The 'charging network' you refer to is already in place for most early EV adopters - it's called a domestic wall socket. This is what 99% of Evers will use 99.9% of the time to charge their EVs. Certainly it will be nice to be able to rapid charge for longer journeys or for when you don't have access to sockets (terraced house/flat dwellers) but these are already on their way and take very little time to install and are relatively cheap. If you compare the cost of installing a clutch of new petrol/diesel pumps (let alone H2 ones) with, say a dozen 70kW rapid chargers, the former is 10 times more than the latter.

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Maddy1 Posted: 7/2/2012 3:43pm PDT

I agree with Martin. No complex "network" is needed for most people. I plan to use an EV as a second car for short-range errands and commuting. No extensive charging will be needed. As to the subject of this article, the drop in battery costs is VERY good news. I've been very disappointed in the high price of EVs to date. Even the forthcoming VW E-Up is projected to have a high price. The E-Up is the kind of EV that I would consider the prototype for initial broad use. But if the price is too high, people won't buy it. Although I don't entirely trust their quality control, the Chinese will almost certainly go for EV market share. You can be sure they won't overprice their products. This should be good for forcing all EV prices down.

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Daniel Posted: 2/8/2013 9:55pm PST

LOL limited charging network? Electricity is everywhere. There is a lack of 240v/480v charging stations but they will come.

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Mike Posted: 12/14/2012 6:02am PST

Is this a typo? Did you mean "signing" or something else perhaps
"Singing contracts in 2012 for projects due to start in 2015 or beyond is not uncommon."

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