By on January 10, 2010


A major study by Boston Consulting Group (BCG) has determined that even if EV battery costs drop by a projected 65% by 2020, the economics will still constrain their widespread adoption. It challenges the industry assumption that a $250 per kWh cost for automotive batteries can be achieved by that date. Nevertheless, the report projects that hybrids, plug-ins and pure EVs will make up 26% of new cars sold in major developed markets. Specifically, the study projects 1.5 million EVs, 1.5 million range-extending EVs, and 11 million hybrids produced in 2020. Regarding the manufacturer’s holy grail of $250/kWh batteries:

Given current technology options, we see substantial challenges to achieving this goal by 2020. For years, people have been saying that one of the keys to reducing our dependency on fossil fuels is the electrification of the vehicle fleet. The reality is, electric-car batteries are both too expensive and too technologically limited for this to happen in the foreseeable future.

—Xavier Mosquet, Detroit-based leader of BCG’s global automotive practice and a coauthor of the study

The study takes on the expectations that current EV technology with its range and cost limitations can effectively replace the IC powered car head on,and strongly suggests that EVs will be limited primarily to specific applications:

Without a major breakthrough in battery technologies, fully electric vehicles that are as convenient as ICE-based cars—meaning that they can travel 500 kilometers (312 miles) on a single charge and can recharge in a matter of minutes—are unlikely to be available for the mass market by 2020. In view of the need for a pervasive infrastructure for charging or swapping batteries, the adoption of fully electric vehicles in 2020 may be limited to specific applications such as commercial fleets, commuter cars, and cars that are confined to a prescribed range of use.

—BCG Report

Regarding the possibility of new technologies to dramatically bring down the cost or increase the capacities of batteries, the study put a dampening slant on the likelihood of new battery chemistry being available before the 2020 date: “because none of the players we interviewed expect that batteries based on new chemistries will be available for production on a significant scale by 2020.”

The study envisions costs for a 15-kWh NCA range-extender pack (similar to the Volt’s size pack, but smaller than the Leaf’s) would fall from around $16,000 to about $6,000. The price to consumers will similarly fall, from $1,400–$1,800 per kWh to $570–$700 per kWh—or $8,000–$10,000 for the same pack.

Even in 2020, consumers will find this price of $8,000 to $10,000 to be a significant part of the vehicle’s overall cost. They will carefully evaluate the cost savings of driving an electric car versus an ICE-based car against the higher up-front cost. It will be a complex purchase decision involving an evaluation of operating costs, carbon benefits, and potential range limitations, as well as product features.

—Massimo Russo, a Boston-based partner and coauthor of the report

The study also takes on the big question as to how the rapidly emerging and developing battery industry will shake out:

The electric-vehicle and lithium-ion battery businesses hold the promise of large potential profit pools for both incumbents and new players; however, investing in these technologies entails substantial risks. It is unclear whether incumbent OEMs and battery manufacturers or new entrants will emerge as winners as the industry matures.

As it stands today, the stage is set for a shakeout among the various battery chemistries, power-train technologies, business models, and even regions. OEMs, suppliers, power companies, and governments will need to work together to establish the right conditions for a large, viable electric-vehicle market to emerge. The stakes are very high.

—BCG report

Our take? This study confirms the three main expectations and predictions we have had for EVs for some time: 1.) They are coming, and in fairly considerable numbers due to the rush by manufacturers to not be left behind and government subsidies; 2.) their batteries will present serious economic challenges to sellers and buyers; and 3.) “conventional” (non-plug-in) hybrids will still be the overwhelming choice of the whole category. And of course, IC-powered cars will still dominate the market.

This study also supports our contention that the most effective EVs in the foreseeable future will be smallish city-oriented vehicles like the Th!nk that don’t require large batteries or create the expectations of longer highway range that can’t be fulfilled.

[Green Car Congress]

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14 Comments on “Major Study Confirms EV Batteries Too Expensive; Predicts 26% Of New Cars Will Be Hybrids Or EVs In 2020...”

  • avatar

    Aside from the “2 dissimilar metals + acid= battery”  picture, the use of a “lemon” seems somehow most fitting…

  • avatar

    BCG?  Who cares?  Bunch of charlatans.  They’ll get this completely fucking wrong.

  • avatar

    <img src=””>

  • avatar

    Again with the predictions. A few days ago TTAC had a story about whether or not 6 cylinder engines would be around in 10 years and dozens posted about the merits (and the lack thereof) of various 4, 6, and 8 cylinder engines.
    Examining the past 450,000 years of human history and making predictions is fun but almost never accurate. But since making predictions is so easy I am going to make a prediction.
    On 2015 July 7 a tremendous volcano is going to erupt in Tawakoni State Park Texas. All life on earth will come to an end and we won’t have to worry whether or not 6 cylinder engines will still be used or if a new battery will allow electric cars to go 1587 kilometers on one charge.
    Incidentally the above report was put out by hydrogen and pig farmer interests and is nonsense.

  • avatar

    Here’s my favorite lithium-ion vide0. The fun starts around 1:02.
    I wonder what a Volt sized battery would look like when it goes up?  Not that it would happen in the real world given GM’s engineering expertise and the UAW’s fine craftsmanship.

  • avatar

    i dunno, i know the Volt has a lot of people against it but it would be my pick. i could drive to work everyday on the batteries but i would still have the ability to use the car to drive 200 miles to see friends. if i owned a leaf i’d have to rent another car or find some other way to go long distances

  • avatar
    Martin Schwoerer

    A quick question, and a longish remark. When you write “our take”, and “predictions we have had”, is this majestetis pluralis, or is it the TTAC staff talking with one voice (which would be something new and rather delightful), or is it the Niedermeyer family speaking?
    Secondly, it’s irresistible for me to criticize any consultant who makes precise ten-year predictions. I mean, these BCG guys couldn’t predict the financial meltdown as late as Q1 2007, as far as I can remember. Technological predictions yes, I’m OK with their shot at predicting the viability of $250/kWh batteries. But their market share prediction stands and falls with the price of gas — among other things…
    Like the politics of global warming, like unrest in the Middle East, like gas taxation, like urban restrictions to ICE vehicles. So it’s silly to put a precise number to it.
    The trend lines are what really matters. Gas will get more expensive. (Diesel is not an alternative except for in places where government bizzarely taxes it on a per-liter and not on a CO2 basis, and doesn’t worry about particulates). Batteries will get cheaper and better. Urban areas will at one point say, we don’t have to tolerate the noise and stink any more, since EVs provide individual transport well enough.
    You gotta keep your eye on the trend lines — otherwise, you might as well be putting your money on SUVs.

  • avatar

    The non-impossible scenario of $8/gal gas, or shortages causing long lines at the pumps would make the “battery price premium” a lot easier to swallow for those who spend that much “premium” money on leather, sunroof and a nav system in higher-end cars. Anyone who has had to wait in line for gas, only to have the station run out before you got to the pump will consider that “EV insurance policy” worth it. How soon we forget.

  • avatar

    It all depends on the AGW agenda. If we keep having winters like we’re having this year gov’ts around the world will back off on all their legislative efforts to halt the perceived “change”. Voters will insist. If that happens, then, except for the Prius, the EV type vehicle will stiff. Too expensive and not versatile enough. And there goes the R&D.

    By 2020 the whole field could be dead in the water.

    How’s that for a prediction?

  • avatar

    Hmm, regarding the photo – does it mean that if I put a nail and a penny in Sebring or in Aveo, electricity will be produced?  There is a cheap EV.

  • avatar

    In 1910, the major problems with electric cars were a) high cost of batteries  b)low range  c) long re-charging times.
    In 2010 the major problems with electric cars are…

  • avatar

    I don’t think that an EV needs to have all the capabilities of current IC vehicles. Many vehicles do not require  a 500 km range nor to recharge in minutes. Both my wife and I could function just fine with an EV, as we commute about 30km each. Add in a trip or two to the supermarket for groceries and we’re still within the range of an electric car. Then the car has all night to recharge.
    In a  multiple vehicle family, running 1 EV would not limit us in any way. I understand that many suburban dwellers have long freeway commutes and would not be able to switch over to EVs today, but I expect that those users are not a majority of our mobile population.
    A number of arguments on this website or others, whether about the continued use of V8s, Ford Panthers, hybrids, EVS – seem to believe that our vehicular need will remain unchanged in the future – but this ignores future CAFE standards, probable fuel price increases and possible taxation. Maybe your future really does include a smaller, more efficient vehicle – enjoy your denial while it lasts.

  • avatar

    The article doesn’t seem to mention several key impacting factors.  Cost of alternative fuels is very important.  If it is costing me to much for gas, the cost of the battery isn’t so bad.  Plus, the premium of the EV or Hybrid doesn’t go out the window like the extra cost of the gas does.  Another big factor is legislation.  The Prius does exceptionally well in Japan because of laws concerning taxes.  Depending if this changes in the next 10 years, it would have a very large impact on EVs and hybrids.

  • avatar

    Who paid for the study?

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