Auto industry ev-battery-price

Published on June 13th, 2013 | by Andrew Meggison

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The Changing Price Of Electric Cars

electric-car-battery-price-to-drop-deutsche-bank_100335624_l

The nice thing about new technology is that, eventually, it drops in price. A flatscreen HDTV used to cost thousands, now there is one in most homes in America. Laptops once cost as much as a compact car; now you can get one for a week’s worth of minimum wage work. The same thing seems to be happening to electric and hybrid cars. The Tesla Model S and Chevy Volt are expecting significant price cuts in the near future, and cars like the Nissan Leaf and Smart ForTwo Electric Drive have already shaved thousands from their MSRP.

Let us start with Tesla. The Tesla Roadster and Model S are the elite of the electric car world – and you pay for them with the Roadster fetching over $100 grand and the Model S sitting at about $62,500 grand after tax credits. Now, visionary CEO Elon Musk is aiming to bring a new Tesla to the masses in three to five years priced near $35,000.  And do not forget the federal and state breaks which will knock that price down a little bit more.

While Tesla is slowing lowering the price of their electric vehicles ( EVs), Nissan has already dropped the sticker price of the Leaf by 18% for a new price of $28,000. Meanwhile General Motors has announced that the next generation Volts will be 7,000 to $10,000 cheaper. The Volt currently sits around $39,000, with much of that cost tied up in the battery. If the chart above provided by Deutsche Bank proves true, battery prices could plummet in the next decade.

So what is going on here? Well, with technological advancement comes price reeducation, which we have been waiting years for. Also competition plays a major role. The EV and hybrid market has hit the mainstream, but consumers are wary of spending luxury-car-money on compact EVs. This is why the Tesla Model S has done so well; sure, it costs a lot of money, but it is a genuine luxury car as well.

But this leaves the lower end of the market wide-open for exploitation, and an EV price war of sorts has set in. The consumer gets a playing field of the gas powered cars competing with the EVs and hybrids. Now that prices for EVs are coming down, and it looks like state and federal breaks are here to stay, at least for now, EVs could soon start selling in numbers that rival many gas-powered models. Soon they might not even need tax breaks to be price competitive. That means that gas powered cars will have to step up their miles per gallon range (and they have) and maintain a reasonable price. That is, so long as battery prices keep falling.

Either way the consumer wins.

Source: The Dailye Beast

Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor’s Degree in Government and International Relations from Clark University and a Master’s Degree in Political Science from Northeastern University. Being an Eagle Scout, Andrew has a passion for all things environmental. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail. You can follow Andrew on Twitter @AndrewMeggison 




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About the Author

Andrew Meggison was born in the state of Maine and educated in Massachusetts. Andrew earned a Bachelor's Degree in Government and International Relations from Clark University and a Master's Degree in Political Science from Northeastern University. In his free time Andrew enjoys writing, exploring the great outdoors, a good film, and a creative cocktail. You can follow Andrew on Twitter @AndrewMeggison



  • Dennis

    Nissan dropped the price of the Leaf largely by decontenting the car verses earlier models.

    • Bob_Wallace

      Actually Nissan cut manufacturing and shipping costs by opening a plant in the US.

    • arne-nl

      Yes, for one thing they lowered the amount of expensive dysprosium in the motor by 40%.

      Otoh they also improved the car by replacing the (cheap) resistive heater by a more expensive and efficient heat pump.

      Additionally to Bob’s comment: the reason why production in the US is cheaper is in large part due to the strong Yen.

      So there are many factors involved and everybody here owns a piece of the truth.

      • Dennis

        Many factors , yes, that’s true. The cheap model has the old heater, so that’s not one of the reasons it’s cheaper.

  • Bob_Wallace

    Apparently GM is test driving EVs with Envia batteries (GM owns a piece of the company).

    On their web site Envia states that their batteries are 400 Wh/kg (about three times the capacity of the LEAF batteries) and cost $125/kWh. That’s about 2030 on your graph.

    Envia states 91% capacity after 300 cycles. The curve is showing only a very shallow drop at 300 cycles, there should be a lot more cycles before the batteries drop to 80%.

    500 cycles in a 200 mile battery pack would be a 100,000 mile, ‘sort of old’ car that still had a 160 mile range. A car with a lot of residual market value. And at $125/kWh it would be a 200 mile range EV for a bunch less money than the LEAF.

    GM’s head of global R&D apparently let it slip at a conference in Canada.

    “Today there are prototypes out there with 400 Watt-hours per kilogram,” said Dr. J. Gary Smyth, executive director of Global Research and Development, General Motors Company.

    Smyth added the mystery batteries will cost much less than batteries in today’s electric cars and they’ll have a “big impact” on the auto industry and “it completely changes the equation” on cost, range, and vehicle packaging.

    http://www.hybridcars.com/gm-rd-boss-hints-at-tesla-surpassing-batteries/

    Of course all that isn’t a sure thing. But it certainly is intriguing….

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  • Ziv Bnd

    I think that the DBank chart from early 2011 is very telling. I just wish that they had done the study again in 2013 and compared the results. Battery prices seem to have dropped significantly since mid-2010 when the Leaf and Volt mules were in testing and the first builds were coming off the assembly line. But Nissan has dropped the price of the Leaf by nearly 20%, in large part by moving production to the US, while GM has dropped the MSRP of the base Volt by around 5%.
    GM is shooting itself in the foot by not trumpeting the $4,000 incentives they are offering, because with them the Volt MSRP would drop an equivalent of 14%, which gets it into the ballpark with Nissan, so to speak. The MBA’s that run GM are being penny wise and pound foolish, again.

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  • http://www.fuelfreedom.org/ Zana Nesheiwat

    The adoption of electric vehicles is a slow process, taking between 10 to 20 years, for that technology to slowly make its way to every vehicle category and every class of consumers. Add to that the 5% – 7% replacement rate (i.e. only 5% – 7% of the car fleet get replaced every year), and we are looking at 30 to 40 years until the impact of that technology is fully felt. The introduction of replacement fuels to the fuel market is feasible and cost-effective.

    • Bob_Wallace

      I really doubt your timeline.

      When buyers have a choice between two identical cars at about the same price except for one being an ICEV and the other a 200 mile range EV with 20 minute recharging capability the new car market should flip very quickly.

      Range anxiety will be gone. There will be enough rapid charging points along our major travel routes to make cross continent drives a breeze in an EV.

      Operating costs for the EV will be a quarter of the ICEV costs.

      About 50% of all US driving is done in vehicles five years old and newer. When the market flips the impact on liquid fuel use will be very quick.

      The very significantly lower operating cost of EVs will likely cause private and business fleet replacement rates to increase. Those people driving an older low mileage vehicle will send it to the crusher sooner because they will be able to make payments on a brand new EV with their gas payment savings.

      Vehicle type niches will be filled very quickly by manufacturers looking for a place where they can make sales.

      • Ziv Bnd

        Bob, I agree with a great many of your points, I just am not sure that the tipping point is going to happen within 3-4 years. Elon is talking a good game on the 200+ mile AER BEV he hopes to be selling the $30k net BEV by 2016 or 2017.

        But given the products we have now, and even Elon looking 3-4 years out, it seems like mass market BEV’s might take until 2017 at the earliest. I drive a Volt, and I love it, but I don’t know if GM is going to get the MSRP down to $32k ($25k net) until 2015, at the earliest, and EREV’s may be the way to go until the price per kWh has dropped another 30-40%.

        24 kWh just doesn’t cut it for a full utility vehicle, 60 (around 180-200 miles) is just about the minimum needed and then you really need a robust supercharger network in place. Once you get to a BEV that has 75 kWh (225 to 250 miles) then things get a little more user friendly, especially in the winter.

        A 35-45 mile AER EREV fits the full utility role right now. An ICE genset costs a lot less than 45 kWh of battery, today at least.

        • Bob_Wallace

          Let me start by defining “tipping point” so that we can make sure we’re talking about the same thing.

          I think the tipping point for widespread EV adoption is when we get EVs with about a 200 mile range, no more than 20 minute 90% recharging, and for a price only a few thousand dollars more than a “same car” ICEV. By a few thousand dollars I expect that’s no more than two years of gas savings. Maybe $3k to $5k.

          OK, now. I don’t know when that will happen. It could happen in the next 12 months if, for example, the batteries that GM is testing are pretty much proven out and GM has been preparing to stick them in a 200 mile “Sparkie”. Or it could be some time in the future or never.

          The Envia batteries are 400 Wh/kg and $125/kWh according to the company. That would mean a 200 mile ‘LEAF’ for the current LEAF price or better.

          The Volt price wouldn’t drop as much because some portion of its price is the ICE. In fact, what would could easily happen is the market for PHEVs might disappear. Four hundred miles with a “lunch break” charge would work for most drivers. Chargers will be in place, they are already being installed in number.

          Now, perhaps the Envia batteries won’t pan out. But Eos, who recently signed a grid storage contract with ConEd, has a zinc-air battery for EVs that they say they will sell for $160/kWh.

          And their grid zinc-air is rated for 10,000 cycles and 30 years. 10k cycles in a 200 mile EV would be a 2 million mile battery. (Would have significant resale value for grid storage after the EV was total trash.)

          Now, that’s two companies that I know about. Both could be blowing smoke. At the same time there could be one or more companies who have had enough funding to allow them to develop out of public notice. (Both Envia and Eos went fairly quite once they got some good funding, as is startup practice.)

          I’ve lived through a few major technology shifts. Slide rules were replaced by rather expensive scientific calculators in two years. Two years after the first TI was sold the two major slide rule manufacturers shut down.

          Digital replaced film in about ten years. Not totally, but film was pushed from 99%+ to a small niche in a decade.

          Desktop computers went from oddities to common in a decade or so.

          LCD/thin monitors and TVs did in CRT units very quickly.

          I think when we cross that 200 mile range and affordable threshold new car sales will flip very quickly and then we’ll have to work the residual liquid fuel vehicles out of the system.

          • Ziv Bnd

            I hope you are right. Being able to fuel your BEV, directly or indirectly, by placing a solar array on the roof of your home is an incredibly positive development, and I would really like to see the BEV’s you envision, at the price point you are talking about within 3 years.

            I think it will be closer to 5 years at the best, probably 7 or 8 years, given how difficult it is to make rapid changes in vehicle production, but I would love to be wrong. Whether it is 3 years, 5 years, or more, I hope to see it happen.

            The main issue I see is building the economies of scale thereby bringing down the unit cost, with a product that will last at least as long as a well built ICE. If the price of a 200+ mile AER BEV gets anywhere close to that of a conventional vehicle, the shift to BEV’s will be relatively rapid.

    • arne-nl

      I think your timeline is spot on. Car technology is frustratingly slow to evolve and the affordable Tesla GenIII will probably still be a $40k car. A truly affordable car must be half that price (before tax breaks or other incentives). To make matters worse people are conservative when it comes to cars. They’ll want someone else to try it out first. Look at all the nonsense people tell themselves to believe EV’s are a dead end technology. There are many people that are not just slow to adopt new technlogy, but actively resist it.

      Another 10 years to become mainstream is my best guess. If I try to more or less precisely define ‘mainstream':

      – At least 2/3 of the large car manufacturers have an EV in their lineup that is on unrestricted sale in all important markets.
      – In all but the cheapest and most expensive segments of the car market there are at least 3 different models from different brands to choose from (eg the Mitsubishi iMiev, Peugeot iOn and Citroen CZero for me only count as one).

      By that definition, I think even hybrids today barely make the mainstream.

      Add another 10 years minimum for these EV’s to conquer the majority of car sales. Add another 10 years for EV’s to account for more than half of VMT.

      What is important to understand for the large car manufacturers is that the shift will be sudden. Any manufacturer lulled into the belief that EV’s are the ‘car of the future’ or ‘unproven technology’, will be overrun by reality and left by the roadside.

      As soon as the technology reaches a certain maturity and most manufacturers have one or even a few EV’s in their lineup, the market share of EV’s will go up from a few percent to 80% in ~10 years time. The climb from 0% to 5% is much harder and takes much longer than from 5% to 80%. The losers of the future are those who do not understand exponential growth.

  • Tim Cleland

    I’d like to point out that it’s the rich people who enable the dropping prices in technology. When a new technology comes out, it’s the rich people who buy it. Were it not for them, the new technology would never come to market and thus would never get a chance to come down in price.

    So, for any leftists here who have knee-jerk tendency to blame the rich, always want to stick it to the rich, tax the rich, pass laws that hurt the rich, you can at least admit that we NEED the rich (for so many reasons…this is just one).

    • Bob_Wallace

      The rich are the early adopters now. True.

      That’s because our middle class has been so ripped off by the rich that they don’t have extra money to spend.

      We don’t need the rich. We need everyone to get paid a fair amount for their contributions. No one is worth millions of dollars a year for their labor.

      If we follow your lead and let the rich grab it all, that will be the end of new technology. We won’t develop new ‘whatevers’ just for a handful of very wealthy individuals. They have servants to do all that stuff.

  • New Digital World

    God Bless the Electric Car. It is a genius idea. Actually, Brilliant. Just like the article points out. The great thing about technology is that it always drops in price and it always do. The Electric Car is the new phase of the future for the Automotive Industry.

  • New Digital World

    The Electric Car come a long way. I remember when I was a kid, I had an Electric Trike, that wasn’t yesterday. That thing, I used to ride it with an extension cord plugged into it. All the technology is in the batteries. That is whats gonna make the Electric Car take off.

  • Bob_Wallace

    I just ran across an interesting article that makes a case that EV batteries, at least the batteries that Tesla uses, are already below $200/kWh. Here’s a couple of tidbits…

    “In 2009, when Tesla started design work on the Model S, cell costs for 18650 cells were already estimated at $200 to $250 per kWh.

    In December 2012, the I.E.K. reported that prices for 18650 cells were collapsing. As of the third quarter of 2012, when Tesla began Model S production, they had fallen to $120 to $200 per kWh.”

    http://www.greencarreports.com/news/1084682_what-goes-into-a-tesla-model-s-battery–and-what-it-may-cost

    Between this and Envia’s $125/kWh it may already be 2030.

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