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Battery Price & Performance = BottleneckThere is a common thread to how new technologies are developed and then commercialized. They don't just emerge low-priced and 100% finished. They typically begin at low volumes and high prices, with many technical kinks left to be worked out. Incremental improvements then take place until a certain tipping point is reached where the price/performance ratio is close enough to the competition that a large number of people will choose the new tech over the old one. This leads to the final phase, where economies of scale provide significant benefits and further refinements put the last nail in the coffin of the old tech. It's the same whether you look at the past 100 years for automobiles or the past 10 for cellphones. A similar thing is happening with electric car batteries - which are the bottleneck for EV adoption - and the main question is: How fast can we make progress and reach the tipping point?
Dr. Steven Chu, the U.S. Energy Secretary gave a speech about many things, but the highlight to me were the DoE's estimates for battery technology improvements over the next decade.
Here are some highlights from Chu's recent talk in Detroit:
Decades ago, we let leadership in battery manufacturing shift to Asia. Today, we’re catching up, but our goal is to become the market leader. Research supported by the Energy Department is pushing the limits of energy density and cost for lithium-ion batteries, while also exploring even more advanced battery concepts such as lithium-air, lithium-sulfur, and a whole class of metal-air batteries. We are still in the early days of this work, but we are seeing some promising results.
Overall, the Department of Energy is partnering with industry to reduce the manufacturing cost of advanced batteries. While a typical battery for a plug-in hybrid electric vehicle with a 40-mile electric range cost $12,000 in 2008, we’re on track to demonstrate technology by 2015 that would reduce the cost to $3,600. And last year, we set a goal of demonstrating technology by 2020 that would further reduce the cost to $1,500 – an accomplishment that could help spur the mass-market adoption of electric vehicles.
The 2008 to 2015 number represents a 70% drop in price from that baseline, while the 2020 number is a further 58.4% reduction from the 2015 number and an impressive 87.5% drop from 2008. At $1,500 per 40 miles of range (it could actually be a bit less because of the difference in the number of cycles that PHEVs and EVs need to plan for), an electric car with a range of 250 miles would need about 9k worth of batteries. If you take into account cost savings from not needing an internal combustion engine and all that comes with it, and that recharging with electricity is much cheaper than refuelling with fossil fuels (which will probably cost a lot more by 2020), it sounds a lot like the price/value ration would be high enough by then that more people would be choosing EVs than gas cars. This could be a tipping point, or maybe it'll come faster if unexpected breakthroughs take place or if oil prices climb rapidly.