Batteries Chevy Bolt electric car

Published on February 10th, 2017 | by Steve Hanley

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EV Battery Prices Falling Faster Than Expected

February 10th, 2017 by  
 

A report in Ward’s Auto dated February 7 says EV battery prices are falling faster than expected and could be lower than the magic $100 per kWh mark by 2020. Ward’s correspondent John McElroy says he learned some interesting things while talking to industry sources at the recent Consumer Electronics Show in Las Vegas.

EV battery prices affect price of Chevy Bolt

He writes, “Back in 2010 the Department of Energy set a cost goal of $125 per kilowatt hour for an EV battery pack by 2022, because that would make electric propulsion systems equal to the cost of an internal combustion engine. In addition to individual cells, the battery pack also includes the supporting structure, cooling mechanisms, and battery management systems.

“At the time, no one saw a clear path of how to get to that cost. But at CES, several EV experts told me the DOE’s number is turning out to be a very conservative goal. They assured me those costs will be under $100 before 2020, and not long after that they will go down to about $80 per kilowatt hour.”

Let’s think about that for a moment. If you are an electric car advocate, what things need to change before EVs go mainstream? First, the price of the cars has to come down. The federal tax credit may not be around forever. In fact, it may not survive the Trump administration’s first 100 days. EV prices have to be affordable to mainstream shoppers even it there are no federal, state, or local incentives. Since batteries are the biggest chunk of an EV’s sticker price, reducing the cost of the battery is the fastest way to slash the sales price. Second, America needs more EV charging infrastructure.

General Motors product chief Mark Reuss has confirmed to Green Car Reports that the cells used in the new Chevy Bolt cost $145 per kWh. If that number dropped to $100, the battery pack for the Bolt would cost the company $4,000 less and that price decrease could be passed along to consumers. Keep in mind that cell prices and battery pack prices are two separate animals. The battery pack includes the individual cells plus the supporting structure, cell cooling mechanisms and battery management systems. According to the Institute for Energy Research, the price of Tesla battery pack today is $190 per kWh.

McElroy believes once battery prices fall below $100 per kWh, sales of battery electric cars in the US could grow to 1,000,000 vehicles a year, with plug-in hybrids responsible for another 1,000,000 sales. Suddenly, the market share of cars with motors would explode from about 1% today to over 10% and in just a few short years. Battery prices can’t do much about EV charging infrastructure, but more cars on the road would put pressure on utilities, governments, and entrepreneurs to make infrastructure catch up with demand. These are exciting times for electric car fans.

Source: Ward’s Auto





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About the Author

I have been a car nut since the days when Rob Walker and Henry N. Manney, III graced the pages of Road & Track. Today, I use my trusty Miata for TSD rallies and occasional track days at Lime Rock and Watkins Glen. If it moves on wheels, I'm interested in it. Please follow me on Google + and Twitter.



  • Epicurus

    This is the most encouraging thing about EVs I have read in some time.

    Why would Trump and the Republicans want to get rid of the EV tax credit?

    If the EV tax credit is repealed, I wonder if battery prices will drop even faster.

    • airchompers

      I’m going to guess that the GOP sees it as an easy sell to the voters – “do you want people writing off $100k+ luxury cars and SUVs?”

      Even if it isn’t scrapped, the program starts to go away after 200k vehicles are sold and most people anticipate that’ll happen sometime in 2018 at the latest.

      • Gnällgubben

        A bit late for that isn’t it? The election is over.

        • JayTee

          He campaigned on cutting government spending.

        • Do not underestimate the steps taken to prop up the entrenched oil giants. As it is, EVs tend to have a higher sticker than the typical gas-powered car, so those interested in gutting it wouldn’t have too hard of a time selling it as stopping a benefit for the rich. The problem is also compounded by the fact that half of all EVs have been sold in CA and some aren’t even available elsewhere, so a lot of people who have elected officials who might have a propensity for such a move also have little-to-no experience with actual EVs.

    • Jim Smith

      basic economics says yes, subsidies artificially inflate prices. Remove the subsidies and prices will fall much faster.

  • Gnällgubben

    Yes and GM’s $145/kWh is probably not even the lowest in the business by now. How much is the rest of the battery pack? I would be surprised if it’s more than an extra 30% making GM’s pack about $190/kWh. Now tell me again that GM is losing money on the Bolt EV 🙂
    The reason the Bolt EV costs $37500 and not $30000 is because of the incentive. GM is simply pocketing the $7500 rebate themselves. Even if the incentive would be removed GM would be able to lower the price far below $30k and still make a profit.
    Why is GM pricing the Bolt EV so high? Because they can. EVs in general are overpriced but that is what happens with new technology. More actors, more choice and more competition on the market will push the prices down.

    • Epicurus

      “Even if the incentive would be removed GM would be able to lower the price far below $30k and still make a profit.”

      A slight profit over and above the marginal cost of production doesn’t guarantee a return of the original investment though.

      Imagine the returns GM is getting on its gas burners where the capital costs have already been recouped, perhaps several times over.

      • Gnällgubben

        True, short term the profit would be low but they indent to use the same platform for a number of cars. Hence what was invested in the Bolt would be recuperated by the following cars as well.

        • Rafael Formisano

          GM didn’t invest anything, LG did it.

          • Epicurus

            LG paid for the R&D to create and the factories to build the Bolt?

          • Rafael Formisano

            Not only was the whole battery (not just the cells) made by LG, the motor, inverter, charger, and much more.

          • Epicurus

            Who paid for the factory to build the car? Who paid for the design of the car?

          • Gnällgubben

            You have no idea what you are talking about

          • bioburner

            Incorrect. GM paid to develop/design/build the platform. LG made many of the parts per GM specs.

      • Steve Hanley

        “capitalism is not serving the best interests of humanity or the planet.”

        Whoa. That is a pretty big can of worms you opened right there! Not saying your wrong……

        • Epicurus

          I said “in this respect.” The market system works well for books, computers, shoes, washing machines.and some other things. It doesn’t work worth a damn for other things like health care.

          It would work well for cars except for this external cost called climate change. We can’t be slaves to the market when faced with this existential threat.

          • Jim Smith

            capitalism works for everything, especially health care. Unfortunately, with all the government subsidies and distortions, capitalism can not work for health care. Get the government out of health care, and prices will rapidly go down and quality will rapidly go up.

          • Epicurus

            How many millions of people had no health insurance before the ACA?

            Texas had almost no regulation of the health insurance industry prior to the ACA, and it also had the highest number of uninsured. I never could buy health insurance in Texas because of a preexisting condition (I was once prescribed Prozac for depression).

            While I am no fan of the ACA, data show that it has bent the cost curve.

            If the free market worked as well as you say, why hasn’t one country in the entire world based its health care system on it?

          • Jim Smith

            healthcare is the most heavily regulated industry in the USA. Taxpayers subsidize it massively. The government is all over healthcare in every state.

            The ACA sure bent the cost curve to the sky.

          • Epicurus

            Like all ideologues, you have a habit of skirting questions that conflict with your ideology and substituting myths for facts.

            From Forbes:

            “While we can expect the Obamacare bashers to pour cold water on this good news [from a CBO report], there is no denying that the law is paying some dividends in the critically important effort to bend the cost curve in healthcare delivery.”

          • Jim Smith

            like most people, you accuse others of doing exactly what you are doing. On Nov 1 2016, rates on ACA exchanges went up 50+% in Minnesota and Oklahoma. Iowa up anywhere from 19% to 43%. Michigan up 16.7%. Increases are true across the board…i do not have time to list the increases for each state. Of course, some 85% of purchased plans are subsidized by taxpayers further distorting the market and driving prices higher while hiding the massive cost increases.

            This is sourced from the progressive biased Time magazine.

          • Epicurus

            The term “cost curve” refers to the rate of overall healthcare spending, not to premium costs. I am sure everyone but you understood that.

            How well did you do in school?

          • Jim Smith

            Like i said and will repeat for you:

            “Of course, some 85% of purchased plans are subsidized by taxpayers further distorting the market and driving prices higher while hiding the massive cost increases.”

            Seeing the ad hominem shows you know you lost the discussion.

      • Jim Smith

        capitalism has lifted more people out of poverty than any other economic system in the history of the planet. Capitalism serves the best interests of humanity, indeed.

        • Epicurus

          One-quarter of the children in the U.S. go to bed hungry. Is that true anywhere in Scandinavia or Europe?

          • Jim Smith

            source?

          • Epicurus

            Multiple sources. According to one, ABC News:

            “Every day, children in every county in the United States wake up hungry.They go to school hungry. They turn out the lights at night hungry.

            “That is one of the stunning key findings of a new study to be released Thursday by Feeding America, a network of 200 food banks and the largest hunger charity in the country.

            “As many as 17 million children nationwide are struggling with what is known as food insecurity. To put it another way, one in four children in the country is living without consistent access to enough nutritious food to live a healthy life.”

        • terminator

          Capitalism has is merits but when out of control it’s horrible. There is has to be nuance and less generality when it comes to speaking about economics.

          • Jim Smith

            please give an example where capitalism is “out of control”, and i bet i can point out how government involvement is the real issue.

          • terminator

            When a healthcare insurer decides to no longer insure you because you cost to much.

            This can no longer happen because of ACA but I personally have family members who played by the rules their whole life but went bankrupt due to being SICK even though they have insurance.

            Capitalism would go wrong if company “A” was able to buy company B,C, D, E and become a monopoly in that service segment which would than give them the control ask for any price they feel is feasible.

            Again, stop being so simple with your dogmatic approach to capitalism. It has it’s merits like I said.

          • Jim Smith

            the only way a true monopoly can exist is due to government. In your scenario, a company F and probably G and H would be created.

          • terminator

            Wrong again.

          • Jim Smith

            please do elaborate how a monopoly can exist without the force of government enforcing it.

      • Hayden

        The environment has got to be worth something.

        I have another idea. Our behaviour is moderated by the dollar, and my idea is based on the “user pays” principal.

        In my state there is apx. one EV buyer for every 1,000 ICE buyers. So, if you choose to pollute, you should be prepared to pay a price for that. After all, we think its fair to pay somebody to pick up our garbage each week, don’t we ?

        So, what if each ICE buyer were levied, say, $20 per vehicle purchased (an environmental levy) and those funds used exclusively to generously subsidise the cost for the EV buyer. 1,000 x $20 = a $20,000 subsidy. No cost to the government (taxpayer).

        There would be a benefit for the ICE buyer in that the EV buyer would be providing cleaner air for all, making our cities more liveable and sustainable.

        The scheme could be reviewed by an independent panel every 6 months or so, and varied according to its success. Simple. The transformation to EV’s under this system would be as rapid as you want it to be. Just fiddle with the numbers.

    • trackdaze

      agree. look for a despecced model or version 2 at or about the time the credit falls away to magically duck under 30k mark.

    • bioburner

      I just bought a Chevy Volt and I pocket the $7500 not GM. If the car is leased then the financing company pockets the $7500 tax credit. The tax credit may or may not be driving the price of the car up. You have a link that shows how much it actually “Costs” to build a Bolt?

    • I’m quite inclined to believe this. I have high doubts that the double battery capacity in the Bolt EV costs $4000 more than putting in the rather complex dual drive powertrain that the Volt has. GM is almost assuredly milking the first-to-market status, but I wouldn’t be surprised to see prices fall quite a bit in due time, especially if Nissan brings in the new LEAF at the same price point as the outgoing model (or even as the Volt).

  • IndyX

    Great news for EVs and Teslas battery price are rumored to be even lower than GMs…
    Once 200 mile EVs cost the same as ICE who would want an ICE car that will give you maintance and repair trouble for years to come??
    I hate to say EV charging infastructure will magicaly appear without any gov help or policies but it will once a million plus EVs start getting sold every year…
    Business would simply love to have customers forced (charging) to stay at their resturaunt or whatever for 30 minutes so they will help roll out infastructure…

    • Epicurus

      A business like Starbucks would be perfectly suited to provide a fast charging network. With what they charge for their coffee and snacks, they could give the electricity away for free.

    • JayTee

      Your last paragraph answers your second paragraph.

  • trackdaze

    the $100kwhr mark is probably more important as a signal to manufacturers than the buying public.

    I wonder if any of the manufacturers that haven’t done their homework are currently approaching a certain gigafactory for supply?

  • Ed

    Batteries not silicon microchips, where Moore’s Law has mostly proven valid, but process-wise, the Gigafactory is applying the same philosophy as has been done with integrated circuits: achieve scale, and costs will plunge. All across the traditional auto industry, business strategists are creating their own trend lines, knowing that cell-level costs below about $80 will accelerate reaching the tipping point. The shape of each company’s trend line is not known to me, but I can easily predict that 1) the trend is steeply downward, departing from the trend line from five years ago and 2) the next, and most important data point will be their best estimate of what Tesla will have achieve by the end of 2017.

    I have my own suggestion, one that is much more aggressive than what industry analysts have been predicting:

    https://uploads.disquscdn.com/images/f61c4f49e130589ca4dc7f0ef33254b62b3120ce63bdb70de6cebbab763943dd.jpg

    • Epicurus

      I hope you are correct. If so, sales of EVs would skyrocket in 2019, wouldn’t they? They would be too cheap to pass up in comparison to gas burners.

      • Ed

        It will be the tipping point, for sure. But a changeover cannot come overnight, rather the infrastructure to support EVs will have to be built…and that will take some time. Being able to “fuel” at home will certainly speed the transition, however.

        • Epicurus

          Tesla’s infrastructure is already good. I talked to a Tesla owner the other night who is driving from Texas to St. Louis and later from Texas to Colorado. The software tells you where the chargers are on your trip.

          Unless GM and others start investing in a charging infrastructure now, Tesla is going to crush them when the tipping point comes.

          • Ed

            Oh. Yes…Tesla has done an amazing job. But chargers for other vehicle types are concentrated in metro areas to handle all other EVs, which typically have short ranges and do not go city to city. The next decade will be very different…with many new players, such as the utilities.

          • Why does GM need to invest in a charging network beyond at their dealerships?

          • Epicurus

            They don’t if they want to cede the EV market to Tesla.

          • Of the Big Three, GM is the least-likely to lose market share, though a compelling price on the next-gen LEAF and Ioniq could crimp their Bolt sales a bit. But the Volt is still selling quite well and they can leverage that power train into other products decently well. The government, albeit under Obama, already announced an initiative to establish EV corridors and then there’s still the $2bn VW settlement to be tapped, though $800mn of that is sequestered in CA. Still, GM would do better bringing down the cost of fast charging equipment on cars and let the market supply the the charging infrastructure itself.

          • Epicurus

            Making fast charging standard on all their EVs would help.

            I agree the Ioniq (both the all electric and the plug-in hybrid) and a 200 mile Leaf could make the market much more competitive. Hyundai is coming up fast in the stretch.

        • terminator

          What infrastructure is needed for the vast amount of Americans that drive less than 50 miles a day?

          Sure their is a need but for most people not so much.

          • Ed

            Well….if we start with the assumption that people will buy a car that cannot be driven from city to city, then I suppose the only problem is how does an apartment dweller charge their car. I know a few people who have Model 3s on order, but at this date have no good idea of how they will charge. For sure, some apartment owners are installing chargers, but this is not yet a trend.

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