Car makers are becoming increasingly comfortable with the capabilities of the lithium batteries they once considered risky and unproven.
But they worry it will still be years before price declines permit electric vehicles to compete effectively with gasoline-powered models without subsidies. Several vehicle designers at the Plug-In 2010 conference said prices could fall 50 percent to 75 percent -- but only over the next five to 10 years.
Lithium-ion battery prices today are generally said to be between $500 and $1,000 a kilowatt-hour. Consider then an average price of $750. They have declined over the past couple years as stimulus money allocated worldwide lifted production volumes.
Clearly there are different opinions about the pace of future declines. But several observations from the conference suggest:
- Prices could drop to between $350 and $400 a kilowatt-hour in five years, according to a projection from Ron Iacobelli, chief technology officer at Azure Dynamics, a supplier of drive technology for commercial electric and hybrid vehicles.
- Forecasts -- or at least hopes -- see price declines to $250 by 2020 (even as energy density improves 30 percent to 50 percent). Asked if the target is conceivable, Ford's Director of Global Electrification Nancy Gioia says: "That's what everyone is shooting for."
- At prices below $300 a kilowatt-hour, car makers see an electric car competing effectively with gasoline vehicles without subsidies.
Perhaps most surprising is that the Chinese cost advantage seems to be disappearing as lithium-ion battery production expands in the United States and elsewhere.
Eighteen months ago, Chinese manufacturers touted costs that were significantly lower. This was in part because some manufacturers didn't incorporate warranties. Other producers sold close to 100 percent of their production, even if some of it did not live up to quality standards.
Since then, costs have risen slightly and are comparable -- or between $500 and $1,000 a kilowatt-hour, says Haresh Kamath, a project manager at the Electric Power Research Institute. The reason is that American manufacturers increased production volumes and lowered costs even while improving manufacturing processes, so discards -- which previously could account for 25 percent of volume -- fell.
At the same time, Chinese companies spent money to improve quality standards in order to match the yields at American-owned factories. They also began to offer warranties.