Drop in battery prices may increase production of electric vehicles (EVs)

Thanks to a global increase in production of lithium-ion batteries used to power electric vehicles (EVs) their price has dropped significantly. This may encourage the manufacture of more EVs.

Price of lithium-ion battery packs has been declining

The average price of a lithium-ion battery pack is now $209/kilowatt-hour. A Bloomberg New Energy Finance (BNEF) survey shows the price dropping to below $100/kWh by 2025.

Analyst James Frith of BNEF claims that the $100/kWh is widely seen as a tipping point that would result in greater adoption of EVs.

The price estimates result from a BNEF survey of more than 50 companies. The rise in numbers of batteries being manufactured have resulted in economies of scale. The larger order volumes for EVs will actually increase prices considerably for batteries of the kind that back-up solar panels since their order volumes will be much lower.

Mitsubishi Electric President also predicts EV batteries to be cheaper

Masaki Sakuyama, president and CEO of Mitsubishi Electric also predicts that prices for the battery-packs that power EVs will become cheaper. He said this will make EV's more competitive with fossil-fuel powered vehicles.

Market watchers say stricter fuel efficiency requirements make gasoline-powered cars more expensive. Some countries are not only imposing stricter fuel efficiency standards but plan to phase out fossil-fueled cars.

Most of the cost of EV's is in the batteries. Sakuyama said: "The cost of battery is now dropping very rapidly, so in the near future, the cost of the electric vehicle will be comparable to the conventional cars."

EV market becomes more competitive

Mitsubishi Motors, partly owned by Nissan and part of the Renault-Nissan-Mitusbishi alliance already produces a hatchback EV called the i-MiEV that runs on a 330 volt, 16kWh lithium-ion battery pack.

While Elon Musk's Tesla remains the leader in EVs both Toyota and Nissan now have purely battery-powered EVs in their lineups. Toyota recently issued an EV with an improved driving range plus autonomous driving features that starts off at $5,000 less than Tesla's new mass market Model 3 whose prices starts at about $35,000.

Major auto producers such as GM, Ford, and Volkswagen are introducing electric models with some making major investments in EV. China is fast becoming a huge market for EVs and is encouraging their use to help solve pollution problems.

Many problems with EV's remain

There needs to be a huge development in a charging infrastructure as well as lessening the length of time taken to charge an EV.

The types of promises made by Elon Musk about his new semi-truck and roadster require enormous advances in battery technology as well as reduction in price as discussed in a recent Digital Journal article.

Bloomberg itself notes that the price of batteries needs to drop by more than half before they will be competitive with cars powered by internal combustion engines. However they expect this to happen by around 2026.

As shown in the appended video Toyota intends to produce an EV using only solid-state batteries.

Previously published in Digital Journal