EV Battery Prices Falling Faster Than Expected

A report in Ward’s Auto dated February 7 says EV battery prices are falling faster than expected and could be lower than the magic $100 per kWh mark by 2020. Ward’s correspondent John McElroy says he learned some interesting things while talking to industry sources at the recent Consumer Electronics Show in Las Vegas.

He writes, “Back in 2010 the Department of Energy set a cost goal of $125 per kilowatt hour, because that would make electric propulsion systems equal to the cost of an internal combustion engine. At the time, no one saw a clear path of how to get to that cost. But at CES, several EV experts told me the DOE’s number is turning out to be a very conservative goal. They assured me those costs will be under $100 before 2020, and not long after that they will go down to about $80 per kilowatt hour.”

Let’s think about that for a moment. If you are an electric car advocate, what things need to change before EVs go mainstream? First, the price of the cars has to come down. The federal tax credit may not be around forever. In fact, it may not survive the Trump administration’s first 100 days. EV prices have to be affordable to mainstream shoppers even it there are no federal, state, or local incentives. Since batteries are the biggest chunk of an EV’s sticker price, reducing the cost of the battery is the fastest way to slash the sales price. Second, America needs more EV charging infrastructure.

General Motors product chief Mark Reuss has confirmed to Green Car Reports that the cells used in the new Chevy Bolt cost $145 per kWh. If that number dropped to $100, the battery pack for the Bolt would cost the company $4,000 less and that price decrease could be passed along to consumers. Keep in mind that cell prices and battery pack prices are two separate animals. The battery pack includes the individual cells plus the supporting structure, cell cooling mechanisms and battery management systems. According to the Institute for Energy Research, the price of Tesla battery pack today is $190 per kWh.

McElroy believes once battery prices fall below $100 per kWh, sales of battery electric cars in the US could grow to 1,000,000 vehicles a year, with plug-in hybrids responsible for another 1,000,000 sales. Suddenly, the market share of cars with motors would explode from about 1% today to over 10% and in just a few short years. Battery prices can’t do much about EV charging infrastructure, but more cars on the road would put pressure on utilities, governments, and entrepreneurs to make infrastructure catch up with demand. These are exciting times for electric car fans.

Source: Ward’s Auto