The Remarkable Plunge in the Cost of Electric Vehicles
A new study suggests that battery-powered vehicles are close to being cost-effective for most people.
Mike Orcutt writes: Electric cars may seem like a niche product that only wealthy people can afford, but a new analysis suggests that they may be close to competing with or even beating gas cars on cost.
The true cost of lithium-ion batteries in electric cars is a secret closely held by manufacturers. And estimates of the cost vary widely, making it tough to determine
just how much lower they must go before electric vehicles with long ranges can be affordable for most buyers. But a peer-reviewed study of more than 80 estimates reported between 2007 and 2014 determined that the costs of battery packs are “much lower” than widely assumed by energy-policy analysts.
The authors of the new study concluded that the battery packs used by market-leading EV manufacturers like Tesla and Nissan cost as little as $300 per kilowatt-hour of energy in 2014. That’s lower than the most optimistic published projections for 2015, and even below the average published projection for 2020. The authors found that batteries appear on track to reach $230 per kilowatt-hour by 2018.
If that’s true, it would push EVs across a meaningful threshold. Depending on the price of gas, the sticker price of an EV is expected to appeal to many more people if its battery costs between $125 and $300 per kilowatt-hour. Because the battery makes up perhaps a quarter to a half of the cost of the car, a substantially cheaper battery would make the vehicle itself significantly cheaper too. Alternatively, carmakers could maintain current EV prices but offer vehicles with much longer ranges. Read the rest of this entry »