As electric cars continue on an incremental growth track, their widespread adoption, particularly battery electric vehicles, will rest on the economics of the fundamental EV technology: the battery.
The battery represents about half the cost of a battery electric vehicle and can weigh in at 1,300 lb, or one-third of a vehicle's weight.
Many researchers claim that the cost of BEV battery packs must fall below $100 per kilowatt hour (kWh) for electric vehicles to achieve cost parity (without government subsidies) with gasoline vehicles. The industry has universally talked about and aimed for this so-called "Holy Grail." The curve for battery capacity hasn't fallen that low yet, but it's finally approaching there.
In a recent study published in Nature Climate Change, Swedish environmental researchers Bjorn Nykvist and Mans Nilsson used a somewhat more conservative figure of $150/kWh. Their review showed that the costs for lithium-ion BEV battery packs dropped steadily at an annual rate of 14% from more than $1,000/kWh in 2007 to about $410/kWh in 2014. Those are industry-wide costs, Nykvist wrote, but for "market-leading BEV manufacturers," (particularly Nissan and Tesla) the cost is even lower, at about $300/kWh.
Once BEVs reach the crucial $150/kWh mark, Nykvist said "electric vehicles will probably move beyond niche applications and begin to penetrate the market widely, leading to a potential paradigm shift." Nykvist didn't give a projection of when such a point could be reached, but acknowledged that current plans to develop large-scale production plants could "push cost towards $200/kWh in the near future even without further cell chemistry improvements."
As the dominant technology for EV batteries, Li-ion has been the main focus of improvement, which has been steady but incremental. However, innovators continue to try to crack the code, with one example being a company called Sakti3, which has developed a solid-state battery that will soon be used in portable vacuum cleaners by Dyson. Sakti3 CEO Ann Marie Sastry has claimed that the company's technology can be applied to EVs and will be able to hit the magic $100/kWh number at scale, but she hasn't given a time frame for that objective.
Other technologies besides Li-ion are moving. Researchers are now working on new technologies, such as magnesium-ion, lithium-sulfur, and lithium-oxygen, for a breakthrough that can continue to push the curve once Li-ion tops out.
However, the quest for cost parity might not require any profound technological breakthroughs, according to executives from electric carmaker Tesla. The company's $5 billion Gigafactory will be able to drive cost parity simply by producing at a massive scale, it claims. Company executives have said the new facility will be able to cut the cost of its Li-ion batteries by at least 30 percent in 2017, in its first year of operation.
Tesla CTO J.B. Straubel told analysts that "to realize the Gigafactory and those cost targets, we don't need some fundamental breakthrough in chemistry and material science. Those things are pretty well understood in front of us."
Besides achieving cost parity, BEVs will have to increase their range to gain wider adoption. Most electric cars are limited to about 100 miles per charge, but, as Design News reported, automakers are now moving toward bigger batteries that should extend the average range to about 300 miles over the next five years.
Al Bredenberg is a writer, analyst, consultant, and communicator. He writes about technology, design, innovation, management, and sustainable business, and specializes in investigating and explaining complex topics. He holds a master's degree in organization and management from Antioch University New England. He has served as an editor for print and online content and currently serves as senior analyst at the Institute for Innovation in Large Organizations.