By on July 12, 2012

A study by consulting firm McKinsey says that the cost of the lithium-ion batteries used in electric vehicles could tumble by as much as 70 percent by 2025, thanks to a combination of factors.

Widespread production of li-on batteries could be one of the main factors. Reuters explains that

McKinsey predicts the price of a complete lithium-ion battery pack could fall from between $500 and $600 per kilowatt hour now to about $200 in 2020 and to $160 by 2025. If gasoline prices hover around $3.50 per gallon or higher, automakers that purchase batteries at $250 per kilowatt hour could offer electrified vehicles that can compete with cars and trucks powered by advanced internal-combustion engines, which are now significantly cheaper.

Consumer electronics manufacturers are also expected to help make battery technology more viable, as their R&D could lead to faster charging times and longer battery life. While Apple is cited as one of the pioneers of improving li-on batteries, a more apt analogy might be that of laptop computers; 15 years ago, laptops were bulky, cumbersome and heavy with utterly dismal battery life. Today, a MacBook Air with 7 hours of battery time can be had – maybe not cheaply, but available to a broad segment of the market. It’s inevitable that EV batteries are destined for the same progression, but widespread adoption isn’t necessarily guaranteed.

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29 Comments on “EV Batteries Set For 70 percent Price Drop By 2025: McKinsey Study...”


  • avatar
    KixStart

    Getting the cost down is good, sure, but the bulk and weight are still critical considerations. The Volt battery pack is about the size of a 26 gallon gas tank and probably weighs about twice as much, although it packs only the energy to move the car 30-40 miles. That takes a lot of useful room out of a compact car.

    • 0 avatar
      KixStart

      Cost reduction without weight and bulk reductions might be more useful in other markets, particularly home electric use.

      It might be possible to make money buying electricity from the grid at cheap overnight rates and selling it back at peak rates. Or it could be used to improve the financial performance of a solar array or wind turbine by storing energy when it’s sunny or windy and using or selling it at peak times.

      • 0 avatar
        Luke42

        If the Leaf cost $12k-$15k, then the tradeoffs would work really well for normal folks. Choose the short-range cheap-to-operate car if it suits your needs, or choose long-range expensive-to-operate complex-to-maintain gasoline car if it doesn’t.

        For the transportation-appliance people, anyway — the rest of you can do whatever you want and pay the going rate for gasoline in 2025. (It looks to me like gasoline will be far more expensive in 2025, no matter how much we drill-baby-drill in the USA.)

        Alas, the gas/electric tradeoff doesn’t work that way today. However, if I do buy a Leaf it’ll be a vote for exactly that kind of future. I’m more willing to pay the early-adopter-premium on this than most while it remains an expensive niche vehicle — because I liked the Leaf on its own merits as a car, in addition to being fascinated by new technology.

      • 0 avatar
        el scotto

        Solar panel payback will vary by location and the actual costs will vary by location. The panels need to be professionally installed and the wiring needs to be done by a certified electrician. Doable? Easily. Subsidies? they vary from 100% to none. It takes some research by the homeowner and some cash outlay to get solar panels installed. Your wind turbine better be as silent as a tomb or expect push back from your neighbors.

      • 0 avatar
        CJinSD

        It is just a matter of time until wind joins hydro-electric and natural gas on the misanthropes’ bad energy list due to the bird apocalypse, not to mention the noise and hideousness of wind farms.

      • 0 avatar

        @CJinSD

        the bird apocalypse is not a problem. It’s easy to site wind turbines where they won’t kill a lot of birds. (Yes, they will kill some, but not nearly as many as tall buildings. And yes, there will be a few misanthropes…) The turbines are actually quite beautiful–very graceful–in my opinion. There are at least 5-6 big ones in the Boston area, and in addition, one next to the highway on the road between Boston and Cape Cod, and two that you see going over the bridge to Cape Cod. I don’t know that I’d want one of these giant ones right next to my house, but the noise does not carry far at all. And I really love seeing them on the drive to Cape Cod.

      • 0 avatar
        CJinSD

        Here in California we already live in the dystopia created by alternative energy. Miles of wind farms blight our highways. Solar panels mar our skylines. It isn’t speculation.

      • 0 avatar
        golden2husky

        Which sounds a hell of a lot nicer that the refineries that line New Jersey highways…bottom line is that necessary energy production of any type has its issues….some worse than others.

    • 0 avatar
      twotone

      What will fall by 70% faster — the price of Lion batteries or the stock price of companies making them? Kudos to A123.

    • 0 avatar

      According to McKinsey, various technical advances could increase capacity by 80-110% by 2020-2025.

      I did not see anytihng that was indicative of faster charging, but with all the tech improvement they are predicting, I would ***imagine*** that would improve too. (caveat emptor.)

      One thing I like that was in the report is that the competition with these dvelopments would result in more efficient internal combustion.

      It may all be moot, however, due to fracking. turning natural gas into liquid fuel is cheap enough to stave off the day when electric cars become truly competititve.

      • 0 avatar
        Lorenzo

        In many places, fracking produces more high grade crude than natural gas, with higher market prices for it than the de-regulated natural gas markets.

      • 0 avatar
        golden2husky

        It also poisons the groundwater with chemicals and may contribute to geologic instability. Again, every energy source has its issues. And fracking is worse than most.

      • 0 avatar

        With all the recent discoveries of massive recoverable deposits of natural gas and shale oil (when they’re talking about Israel becoming a net exporter of oil and gas we know that it’s not 1973 anymore), members of the enviro religion realize that they must stop the drilling before it starts or it’s game over for their pet alternative energy sources. Hence the scaremongering about fracking.

        “May contribute to…” <- the precautionary principle on stark display.

  • avatar
    nikitarama

    pay no attention to the man behind the curtain

    • 0 avatar
      Luke42

      ?

      Clearly, you mean the man with a PHD and clad in the cleanroom gear behind the entrance curtain to the lab saying “how can I do this cheaper and better?”

      If you mean something else, you’ll have to explain it in order for the rest of us to get it.

  • avatar
    Sundowner

    I have been saying this would happen for years. Anyone who bought a Makida 9.6v cordless drill back in the 90’s for $300 and has since bought an 18v DeWalt drill for $200 in the past two years should have seen this coming.

    Technology always advances. Too few of us remember that the first jet engines sucked way more gas than prop driven engines, and fuel injection was a curious aluminum box on a corvette engine.

    • 0 avatar
      Luke42

      The consensus seems to be that battery *capacity* will grow by a few percent a year, but there’s no reason that price shouldn’t drop.

      And, if Tesla can make a 300-mile EV for $80k using existing technology, then the battery weight works out just fine. It’s the $80k that makes the 99% wince — and rightfully so.

      Tesla’s strategy has always been to sell cars to Elon Musk’s drinking buddies, and then gradually move downmarket as they build capacity and gain confidence in their technology. The Model S looks great step in that direction. Another step or two like that, and maybe I’ll be driving around in a snazzy Tesla Model M(inivan).

  • avatar
    Robert Schwartz

    I am willing to place a substantial cash wager on the proposition that the projected cost reductions will not occur in the time frames claimed.

    • 0 avatar
      chuckrs

      I’m an optimist, but I won’t take that bet. If it happens, wonderful, but it wouldn’t be prudent to plan on it.

      Sundowner – too few of us remember that nuclear fusion power was right around the corner in the 1950’s. Technology doesn’t always advance on our hoped-for timetable.

    • 0 avatar
      Luke42

      I’d take that bet.

      Look at how consumer battery costs have come down so much over the last decade for electronics and power tools that it’s hard to get a corded power drill anymore. The laptop and cell phone markets have done wonders for the costs of lithium-ion batteries, but there’s a long way to go in terms of economies-of-scale for automotive batteries.

      Another aspect is that the price of the batteriesis $18000/300kg=$60/kg (Wikipedia numbers) is nowhere near the cost of the $6000/ton=$6.60/kg cost of battery-grade lithium carbonate (http://www.lithiumamericas.com/about-us/lithium-info/). Lithium is far from the only component in the pack, and the anodes/cathodes could be some sort of exotic material — and the BMS can be customer-designed electronics. But the lithium is probably the component that is least negotiable in the battery design.

      Lastly another component of the bet: your opposition to EVs seems to be based on something other than the cars themselves (politics?). So, I’d also be betting that I’ve done more homework on the science and engineering than you have.

      • 0 avatar
        chuckrs

        re: your bet

        I’ll hold the money for yez’.

        I am not opposed to EVs, but I do agree with those who don’t want the government to subsidize production as opposed to R&D. This is the case be it batteries, wind turbine power, solar (panels and heliostats) or other. If it is market ready, the market will embrace it.

        Heading off the oil subsidy argument – oil and sells for about $2-$2.25 per gallon crude out of the ground. End users buy it for $3 per gallon plus tax, after exploration, production, transport, refining and distribution expenses and profit. My state – RI – is subsidizing offshore wind energy production by forcing ratepayers to pay 3X the going rate (which is blended in with reliable and economically viable power so we don’t feel the bite as much). That would be like paying $5 per gallon assuming the 3x multiplier on after extraction costs to $9 per gallon if the whole cost is used. Plus tax, of course. And my town is weighing a 2MW wind turbine – de-rated for average energy production, it will provide every household with enough power to run a 60W incandescent – which makes me anticipate decent color rendered LEDs even more – that 60W would go much further than with CFLs or incandescents.

        PS – some of my skepticism comes from 39 years as an R&D engineer. In the past few years, I’ve worked on batteries (well-publicized twitchiness) and heliostats (you can fail them with one ill-advised quick start-up), among other projects. Its not just capacity. Its also reliability, maintainability and robustness, and economic viability. I’ll personally be ready for an electric car when it can keep me comfortable in winter and summer and get me real world 50 miles before a quick recharge is required. People who like 500HP cars and super duty trucks might say the sweet spot is 200 miles – what they get now, not out of the question in a decade but still subject to the above caveats.

      • 0 avatar
        golden2husky

        ……which makes me anticipate decent color rendered LEDs even more…..

        They are here now…a 60W equ LED conversion for recessed lights are available at the Depot for $29 each. If you are installing new cans, the conversion kit obviates the need for the incandescent lamp and baffle trim, so the real cost is about $11 to go LED and that is before the utility rebate. They are dimmable and the color rendering is superb. I can’t imagine why anybody would put an incandescent, or a CFL for that matter, in a recessed light…

  • avatar
    JMII

    We should all be driving flying cars by now too ;)

    Anyway I see the biggest hurdle for EVs is the charging infrastructure. If my daily driver could go 40 miles between charges that fine – provided I have a charger at work, a charger at home, a charger at the mall, a charger at the doctor’s office, a charger at the gym… etc. Basically anytime the car is stopped/parked it needs to be plugged in and eating up those electrons to recharge.

  • avatar
    Crosley

    I don’t doubt a reduction in the price of lithium batteries, but that’s hardly what’s holding back electric cars.

    Right now, federal subsidies come awfully close to covering the “cost” of a manufacturers’ battery pack. (I think the estimate for the Volt battery pack was $8,000) So to consumers, the battery is essentially “free” already.

    The biggest issue with electric vehicles is still range and capacity. You’re not going to see an affordable, full size electric truck that can tow a payload anytime soon or one that can go hundreds of miles on a single charge. What you’ll probably see is more vehicles like the Leaf (enclosed golfcart) that become cheaper, which is still a positive development.

  • avatar
    redrum

    “15 years ago, laptops were bulky, cumbersome and heavy with utterly dismal battery life”

    A lot of the improvement in laptop size and battery life has been due to improvements in components that are not the battery. Thinner and more power efficient cpu, memory, screen, introduction of SSDs, etc. I think cars have more challenges in this regard, as they have certain size and safety requirements.

    • 0 avatar
      el scotto

      Yeah but you still have to downsize the battery to fit the smaller components, Moore’s Law and all that. I had a couple of Thinkpads and you could’ve used the batteries as a club. We all (and our shoulders) win with smarter/better technology ;).

  • avatar
    jrhmobile

    Cool. Then in about 15 years I’ll consider buying one.


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