A new Obama administration report predicts a sharp decline in the cost of hybrid-electric vehicle batteries over the next three years, but industry analysts are calling that forecast optimistic.
In 2008, a typical battery for a plug-in hybrid electric vehicle with a 40-mile electric range cost $12,000 (assumes 10kWh batteries). But in part because of the investments made by the Administration, the United States is on track to demonstrate technology by 2015 that would reduce the cost to $3,600.
Such a drop could be a big step forward for the electric car market. A Chevy Volt battery would cost about $5,760, significantly less than it is believed to cost today. Similarly, a Tesla Roadster battery -- which, according to recent news reports, is being offered to customers at a replacement price of about $40,000 -- would drop to $14,400.
The government report cites investment in advanced battery research as the reason for the projected price drop. "In 2009, the US had only two factories manufacturing advanced vehicle batteries," it states. "Since then, we have supported 30 new advanced battery and electric vehicle component plants that are opening across the country."
But industry analysts questioned whether the going rate of $800-$1,000/kWh could drop that far in such a short time.
"It's very optimistic," Hrishikesh Sathawane, electric vehicle and energy storage analyst for Lux Research, told us. "A lot of cost reduction will come from economies of scale. But for economies of scale to happen, there has to be huge customer demand. And we don't see that happening."
There's no doubt that there should be significant progress made in reducing the costs of EV batteries, particularly considering how much time, resources, and funding (government and private sector) is going into fueling new development in this area. However, given that it's an election year, I'm betting that this report probably leans towards a more bullish forecast as the current administration wants to paint its efforts in a favorable light. Hopefully, people can see past the politics and focus in on the important takeaway that there will be light at the end of the tunnel and with enough grit and engineering ingenuity, EV battery costs will come down over time, just like the cost of any new innovation. It's all part of the process.
Beth, you hit it right on the head. These devices are following the normal technology demand curve. A good example is flat screen TVs. It was both demand and innovation that contributed to the rapid decline in prices and increasae in capability. I see both for EV batteries. The current technology, as is, will not be what we have when the price comes down. As for predicting the timing, lot's of luck.
Beth, you're right; I'd prefer to see such a report from the CBO instead of the President's administration. Such a report will never escape the bias from its source. Better yet, have an organization the likes of Consumer Reports generate the report.
I wonder how production in China will affect battery prices in coming years. China has certainly worked to bring down the coast of solar panels in recent years. I understand they are also targeting EV batteries as a market they want to grab.
Fred Smith, CEO of FedEX said this about where he sees the local delivery industry going...
"I think in three or four years you will have a battery vehicle with a range that's probably double what it has today — a couple of hundred miles versus a hundred miles — and it'll probably be 25 percent to 40 percent cheaper than [it] currently is."
"An all-electric pickup and delivery van will operate at a 75 percent less per-mile cost than an internal combustion engine variant," he says. "Now, I didn't say 7 1/2 percent — [I said] 75 percent. These are big numbers.
Smith says he believes that six years from now, electric vehicles will be in wide commercial use, transporting everything from FedEx packages to plumbers and pizza.
As for where battery prices are now, let me offer this...
Better Place, the company currently building car-charging and battery-swapping networks in Israel and Denmark, is purchasing batteries for cars at $400 per kilowatt hour for delivery in early 2012, according to company executives.
"The government report cites investment in advanced battery research as the reason for the projected price drop"
Unless and until without some technology development happens, how can we say that packing cost can come down? Investments, doesn't mean that cost factor can bring down. For that, low cost technologies have to develop and government also has to contribute by keeping the tax level at minimal.
Personally, I have a hard time believing any forecasts from the government (either those currenlty in who want to keep their jobs, or those currenlty out that would like to get those jobs) during an election year. The timing and massaging of various reports and data can be suspect.
Bob, even the skeptics wouldn't argue with you about delivery trucks. Most experts I've spoken with have said that delivery vehicles will be the primary market for pure EVs.
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