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Cheaper Electric-Car Batteries: Slow & Steady Wins The Race

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Historical Prices & Specific Energy Trends for Li-Ion Batteries (Duke University, 2009)

Historical Prices & Specific Energy Trends for Li-Ion Batteries (Duke University, 2009)

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Did your parents ever tell you, "Slow and steady wins the race"?

It can be annoying to hear as a child, but often it's true--and in the case of electric car batteries, it's how they'll get less expensive.

As a new posting from the Washington Post's Wonkblog points out, there is no Moore's Law for batteries.

That's the law underlying the rapid improvement of consumer electronics like mobile phones and computers, which says the number of transistors in a microelectronic device roughly doubles every 18 months.

Run that rate over many years, and you get order-of-magnitude improvements in performance or better from decade to decade.

The post cites a recent National Academy of Sciences study, which concludes: "Scientists and battery experts, who have been optimistic in the recent past about improving lithium-ion batteries and about developing new battery chemistries—lithium/air and lithium/sulfur are the leading candidates—are considerably less optimistic now."

We haven't seen quite such pessimism in our interviews with battery experts, both from cell fabrication companies and automakers.

Instead, there's a broad consensus that electric-car batteries of any given chemistry will make slow, incremental improvements in performance from minor improvements to their chemistry and better manufacturing techniques.

We wrote last year that the rate of improvement in large-format lithium-ion cells, the kind used in electric cars, is likely to mirror that of small format cells since 1989: 6 to 8 percent a year.

That rate is depicted, more or less, in a chart from a 2009 study done at Duke University.

And there's still huge room for improvement in existing battery costs simply due to economies of scale as the number of plug-in electric cars built rises.

Last year, there were roughly 53,000 plug-in cars sold in the U.S. and, according to analysts, a total of more than 100,000 globally.

With the exception of the highest-volume vehicles--currently the Nissan Leaf, at 50,000 after two years and counting--and the Chevrolet Volt, most plug-ins don't use large enough numbers of cells to justify truly efficient high-volume manufacturing.

But take that total to 1 million vehicles or so in a few years, and there will be enough volume for the largest cell makers to operate at a more efficient level.

Automakers will likely use some of the improvement to fit larger battery packs for longer range, trading off cost reduction and range increases.

Lithium-ion battery pack of 2011 Nissan Leaf, showing cells assembled into modules

Lithium-ion battery pack of 2011 Nissan Leaf, showing cells assembled into modules

Meanwhile, analysts have revised their estimates of future battery costs downward.

As the Wonkblog post notes, McKinsey & Company released a 2012 analysis that "predicted that the price for lithium-ion batteries could fall by as much as two-thirds by 2020...to around $200 per kilowatt-hour."

The U.S. Environmental Protection Agency, in turn, estimates that a new gasoline-powered car in 2025 will cost $3,000 more in real dollars than it did in 2012, due to the cost of new technologies to meet strict corporate average fuel economy rules.

The automakers we've talked to consider that estimate to be a best-case scenario. Some have said they feel the real cost could be as high as twice that number.

So with battery prices falling--slowly but steadily--and conventional cars getting more expensive, there's likely to come a tipping point for electric-car adoption.

It won't be this year, or next year, or even 2015. But around 2020, things should get pretty interesting.

Maybe your parents were right after all.

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Comments (30)
  1. The battery part makes sense, but I don't know about the gasoline part.

    If cars are purchased on a fixed budget, then they will not cost $3000 more. The customer will likely get a car that is smaller or less well equipped but more fuel efficient. The price will stay the same. The analysts typically make the mistake of doing a static rather than dynamic calculation.

    Secondly, assume that the ICE car price is actually $3000 more. If that drops fuel consumption from $3000 to $2000/year, the car is actually less expensive not more as implied in the article.
     
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  2. The chart shows batteries at < $400/kWh in 2005! Can that be right? I thought they were at $500/kWh right now, 8 years later.
     
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  3. Probably the cost for lap top and phone batteries. Maybe they are cheaper than big ones for autos?
     
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  4. That is because GCR has been misinforming you about the cost of batteries for years.

    Or it might be that some people include the cost of controllers, thermal management systems, etc in the price and some done.

    In any case, people that convert their own cars have been able to buy batteries at
     
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  5. Got cut off.
    ... $400/KWH for about 4 years now.
     
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  6. John if big auto is paying more than $200kwhr for cells then they are getting ripped off. The materials are rather common and most $1-3/lb on 22lbs/kwhr. Only .5lb of that is lithium which is only $8/lb IIRC.

    So basically big auto is lying on their costs to keep EV prices too high for big numbers to sell.

    Though it's good they, big American auto are buying cells rather than making their own as their track record sucks.

    I'm on the verge of switching to Lithium's but would like the $400lb retail price to drop some more, the protection electronics to get better, cheaper and allow more peak power/kwhr.
     
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  7. There are more comments in this thread
  8. Hate to nitpick, but a chart that is eight years old leaves many questions unanswered.
     
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  9. I don't hate to nit-pick. What on Earth is the point of showing such hopelessly out of date data, especially when huge improvements in specific & volumetric capacity have been achieved in the last 3-4 years let alone price reduction! Is this some kind of joke?
     
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  10. The last chart in WonkBlog uses Total Cost of Ownership(TCO) as the metric for when a BEV is cost competitive with ICE vehicle. It shows BEV is nowhere near competitive. But that is not correct with current lease deals for the LEAF S and federal tax credit.

    I used TCO calculator http://www.befrugal.com/tools/electric-car-calculator/

    Nissan current LEAF S lease is $199/month 36 months w/ $2,000 initial. (Nissan applies fed tax credit to lower initial) Assume an added $1,500 initial costs for home charger install.

    Toyota offers Prius for $229/month 36 months w/ $2,729 initial.

    Input $3.72/gallon, 8.3 cents per kWh & 11,500 annual mileage

    BEV wins! After 3 years, LEAF S TCO is $11,622 vs Prius $13,570 (not including maintenance costs)
     
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  11. @Rich: I would observe only that it's well known in the business that retail car buyers act irrationally. They overweight purchase price (or, more likely, monthly payment) and underweight TCO.

    The only really rational buyers tend to be fleet managers, who are often willing to pay more upfront for lower lifetime operating costs and a payback point in years 3, 4, or 5. And in the recession, many of them have come under pressure to buy cheaper vehicles if they cost more down the road.

    TCO is a wonderful and appropriate accounting concept. But very few people approach their car purchases like accountants. If they did, the vehicle fleet would be quite different.
     
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  12. Did you miss the part where the LEAF is $199/month and the Prius is $229/month? i.e. the LEAF is less expensive from the beginning?
     
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  13. Not to mention the HOV access that Prius doesn't get.

    Of course, that is CA market (only the largest market for both Prius and EVs).
     
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  14. Tesla is using a True Coast of Ownership calculator to explain their lease. http://www.teslamotors.com/true-cost-of-ownership

    Somebody should talk to Elon about conforming with the rest of the car business world ;)
     
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  15. Those prices for the Leaf and Prius are for stripped down cars. Also the Leaf with only a 70 mile range is not enough for many folk liek me that live in a rural area. I have 2 cities that have good shopping for me and my wife, but both are around 40 miles away. That makes the Leaf a no-brainer for us. That is why we bought the C-Max Energi instead. Right now we are getting 25+ miles from every recharge. The last shopping trip I got 29.2 miles on electric and that was a total distance of about 34 miles.
     
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  16. @Barry: What were the maximum speeds at which you achieved that 29.2 miles on electric? That's the highest number I've ever read for a C-Max Energi. My assumption is that it would be fairly low speeds?
     
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  17. That calculator does not include the C-Max. That is stupid as this car has been around for over 6 months.
     
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  18. @Barry: I note from our comment moderation tool that you have left 10 comments in a row lauding the C-Max Energi in comparison to other vehicles. I can count on one hand the number of commenters who do that (and I read every comment on the site).

    Given that, I have to ask: Are you simply an enthusiastic owner, or are you working for any entity that is operating to promote Ford online?
     
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  19. "That calculator does not include the C-Max. That is stupid as this car has been around for over 6 months. "

    It is stupid if someone who can't understand the difference between a "plugin" and a "non-plugin". It is also stupid if a person can't read or can't reason logically.
     
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  20. Looking at BEV prices alone vs. ICE is skewed to business of selling vehicles. As most of us are buyers we're more interested in TCO (total cost of ownership) while we have the vehicle. Either in $/month, $/yearr, or $/mile.

    In 1990 gas at pump was 99¢/gal and electricity was 8.9¢/kWh (~$3.00/gal-e), in 2000 gas was $1.50/gal, $2.00/gal in 2004, and 1st passed $3.00 in 2006! Since 2008 has remained above $3.00/gal (except winter 2009).

    Today gas is $4.50+/gal and electricity is $0.12/kWh (~$4.00/gal-e). Doesn't seem significant, unless consider ICE gets ~25mi/gal & EV gets ~100mi/gal. That's 4* the distance per $1 now… X* distance per $1 in 2020? (If last 20 years of pump price inc. hold over next 10 years, X could fall between 6* & 16*)
     
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  21. "Battery prices will be down to €180–200 per kWh for large-format battery cells in 2014/2015."

    That’s $238 - 264/kWh.

    http://www.rolandberger.us/media/pdf/Roland_Berger_Li-Ion-Batteries-Bubble_20121019.pdf

    Does Berger know what he's talking about? I don't know, but Green Car Congress which is generally reliable thought so.

    Apparently battery manufacturers are being forced to sell close to the cost of manufacturing because there is excess capacity. (Like what is happening to solar panels.)

    It's unlikely that increased demand would allow the price to rise. Increased EV/PHEV sales rates would be dependent on keeping the purchase price low.
     
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  22. @Bob hints to important point… connection between solar (& wind) to battery based energy storage. Energy Storage could play as significant a evolutionary driving force going forward as small personal device batteries have had on EV batteries over the last 10 years.
     
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  23. Ah, the old myth of slowly and steadily declining battery cost again. Only works using really old data, ignoring the possibility of battery breakthroughs and ignoring data that don't fit the pattern.

    Like Tesla. Currently its buying about 140 million cells a year from Panasonic so it's safe to assume that maximum scale economics are achieved and their battery cost appear to be in fact way ahead of the pack, probably below $300/KWH.

    This myth is persistent because it's supported by many analysts who in turn base it on what all sorts of interested party whisper in their ears. Nobody reveals their true cost of course. The end result seems to be a pattern of EV adoption that coincides nicely with the rate of oil depletion. Everybody happy.
     
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  24. @Chris: I'm not clear from your comment whether you believe cell costs will decline LESS than 6-8% a year, or MORE. Please explain?

    Also worth noting that no other volume maker is using Tesla's scheme of thousands of small commodity cells. Neither good nor bad, just worth pointing out. I think I've read somewhere that one Tesla battery exec said the company would likely to move to using fewer large-format cells at some point, but can't find the quote now.
     
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  25. My point is that patterns of (a rather distant from your quote) past may not be a very accurate reflection of future cell price, because new technology may cause a sudden fall in cell price and I'm not aware of any physical or economic laws that suggest that battery cost necessarily follow a fixed pattern. It's just a useless rule of thumb that somebody developed based on past observations.

    The universal format cell strategy works for Tesla because the economics of scale are already there due to other applications. It's also a dead end I think: these cells are unlikely to show much further improvement in cost. Maybe that's why Tesla is looking at new formats for the further improvement in cost it needs for its upcoming "affordable" model.
     
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  26. ...some further speculation about Tesla's battery conundrum: maybe within the parameters of the chemistry Tesla uses the perspective for a further drop in $/KWh is limited no matter what format is used. However a lot can be gained in packaging cost if Tesla could persuade Panasonic to do a larger format cells for them. For that to happen Panasonic needs to be sure that Tesla will buy them in the numbers required to produce them economically because there is no electronics industry to fall back on for such large cells. Maybe that's why Tesla is postponing the lower priced sedan: it needs to establish the credibility with suppliers that it can commit to large numbers first.

    Complex stuff that doesn't easily fit any rules of thumb!
     
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  27. It is funny that just yesterday, KCBS news had some so called "expert" on the radio talking about Fisker Karma's layoffs and made a claim that currently "EVs" don't work b/c battery cost is about $700-$800 per KWh. That person is named "Cole" and some kind of "Detroit" auto expert...
     
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  28. Expert=LOL
     
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  29. "predicted that the price for lithium-ion batteries could fall by as much as two-thirds by 2020...to around $200 per kilowatt-hour."

    I doubt we'll be using li-ion in 7 years; but you never know.
     
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  30. I've been watching a web site that is a sponsor of DIY Electric Car forum to see if the price of batteries is coming down. For more than a year now, the exact same prices are posted for batteries. I'd like to do a conversion so I could build my own, but at the price batteries are listed for {as well as other quality components}, I am finding it very difficult to jump in. Until something changes, I guess I'll be waiting on the sidelines. :-(
     
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