Study Finds Battery Costs to Limit Adoption of Electric Cars
Electric-car battery costs are unlikely to drop enough over the next decade to drive widespread adoption of fully electric vehicles without a major breakthrough in battery technology, according to a new study by The Boston Consulting Group (BCG). Ford Motor says it plans to develop advanced lithium-ion battery systems in-house for its next-generation hybrid.
The report,”Batteries for Electric Cars: Challenges, Opportunities and the Outlook to 2020” (PDF), finds that the long-term cost target used by many carmakers in planning their future fleets of electric cars — $250 per kilowatt-hour (kWh) — is unlikely to be achieved unless there is a major breakthrough in battery chemistry that enables higher energy storage without significantly increasing materials or manufacturing costs.
Another finding indicates that most electric cars in the new decade will use lithium-ion batteries, which are lighter and more powerful than the nickel-metal hydride (NiMH) batteries used today in hybrids like the Toyota Prius.
Many OEMs hope that the cost of an automotive lithium-ion battery pack will fall from its current price of between $1,000 and $1,200 per kWh to between $250 and $500 per kWh at scaled production, which is about the cost of similar lithium-ion batteries used in consumer electronics applications. BCG expects actual battery costs to be higher than what carmakers predict because consumer batteries are simpler and don’t have to meet demanding requirements.
Despite the battery challenge, the report projects steady growth for electric cars and batteries. BCG estimates that 26 percent, or approximately 14 million, of the new cars sold in 2020 in the major developed markets — China, Japan, the United States, and Western Europe — will have electric or hybrid power trains. BCG also expects the market for electric-car batteries in those regions to reach $25 billion in 2020.
Other key challenges facing the electric-car battery market are energy storage capacity, charging time, and infrastructure needs, according to the study. BCG believes that pending a major breakthrough, batteries will continue to limit the driving range of fully electric vehicles to 250 to 300 kilometers (about 160â€“190 miles) between charges.
As a result, fully electric vehicles are unlikely to be available for the mass market by 2020, say researchers.
Despite the challenges noted in the report, Ford Motor Company is pushing ahead with plans to design advanced lithium-ion battery systems in-house for its next-generation hybrid to be built at the Michigan Assembly Plant.
Ford joins four other lithium-ion battery makers, which set up shop last year in Michigan, to advance battery manufacturing, thanks to government incentives.
The automaker is also investing an additional $450 million more in its electric vehicle plan, paving the way to build next-generation hybrid and plug-in hybrid vehicles in Michigan beginning in 2012, which is also expected to create 1,000 new jobs.
Last year, Ford announced it was spending $550 million to retool its Michigan SUV plant to produce its more fuel-efficient Ford Focus, including an electric version in 2011.
In addition, Gas To Electric, Inc. has delivered the first, light duty, all-electric Ford Ranger to the City of Santa Monica for use in the city’s public works fleet, which is expected to lower both the city’s operational costs and carbon footprint.
Paul Pearson, president of Gas to Electric, estimates the operational costs to be 2 to 3 cents per mile. He also says because the motor only has three moving parts, lifetime costs will be dramatically lower. The conversion, made with all U.S. parts,Â was funded in part with grants and several local, state and federal tax incentives, he says.
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