$40,000, 200-Mile Electric Car Is Biggest Energy Storage Growth Opportunity Of Near Future

MAR 20 2015 BY MARK KANE 39

The making of a Nissan LEAF battery in Sunderland, UK

The making of a Nissan LEAF battery in Sunderland, UK

Lux Research sees upcoming $40,000, 200-mile electric cars as a huge opportunity for the energy storage business, which already is growing quickly.

“By 2020, the new EV battleground should account for $5 billion or more in Li-ion battery sales, making it the biggest new opportunity for energy storage in transportation, because it combines larger packs (around 50 kWh) with more sales (hundreds of thousands of vehicles). Clients should therefore view this parameter space as a key place to focus efforts: Designing innovations to enable 50 kWh packs that achieve 200 Wh/kg and $300/kWh at the pack level, primarily for Tesla, GM, Volkswagen, and Nissan.”

$5 billion in less than 5 years? With ease, we think.. At the end of 2014, battery sales for all-electric cars alone exceeded $0.5 billion per quarter, five times more than 3-4 years ago. In 2015, $2 billion is doable at zero growth.

Batteries for BEVs are a much larger market than for hybrids and plug-in hybrids:

 “According to Lux Research’s Automotive Battery Tracker (client registration required), in 2014 EVs used a remarkable $2.1 billion worth of energy storage. Meanwhile, plug-in hybrids (PHEVs) used three times less batteries – about $0.7 billion worth – despite selling in similar vehicle volumes (see Figure 1). This discrepancy is due to the fact that PHEVs typically need much smaller battery packs than EVs, since the former have an engine to extend range, while EVs have to make due on batteries alone. Hybrids (HEVs) cannot match EVs either: Despite selling about 1.5 million units in 2014, an order of magnitude more than the 140,000 EVs that consumers bought in 2014, HEVs also used just $0.7 billion worth of energy storage in 2014.”

Chevrolet Volt EV Concept

Chevrolet Bolt EV Concept

Lux Research expects that to introduce BEVs with range of 150 miles to 200 miles, prices of batteries must fall significantly – $300/kWh at the pack level.

50 kWh times $300 mean $15,000 for battery pack. Another $20,000 for rest of the car?

“The obstacle to achieving this new class of vehicles is battery costs. The first generation of EV batteries were expensive. For example, Ford’s CEO noted in 2012 that his company was paying about $520/kWh to $650/kWh for its Focus EV battery packs. Scale and purchasing commitment is undoubtedly part of the issue as well, as Ford’s Focus EV has turned out to be more compliance vehicle than high-volume production car. But even at higher volumes, it is likely that Li-ion battery packs cost about $400/kWh to $500/kWh for most OEMs. These costs are on the brink of a step-change. LG Chem Power (client registration required) is aiming to cut its Li-ion cell prices from $300/kWh to $200/kWh by 2017. Bosch’s CEO sees Li-ion batteries falling to half their current cost by 2020, and of course, part of the Tesla-Panasonic Gigafactory effort (client registration required) is about cost reduction. All things considered, to compete effectively in the new EV battleground, developers will need to make batteries that cost less than $300/kWh at the pack level (or less than $200/kWh at the cell level), while also boosting energy densities to about 200 Wh/kg at the pack level.”

The first generation of EVs clustered into economy cars and luxury cars, ignoring a middle-range battleground for EVs (source: Lux Research)

The first generation of EVs clustered into economy cars and luxury cars, ignoring a middle-range battleground for EVs (source: Lux Research)

source: Lux Research

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39 Comments on "$40,000, 200-Mile Electric Car Is Biggest Energy Storage Growth Opportunity Of Near Future"

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Speculawyer

Bring it on! My money is ready to buy one.

Ash09

Will definitely be an interesting “battle” to watch.

I wonder if Toyota is just going to stand by and watch, or if they have a secret EV in the works and are keeping mum on it.

Cavaron

My guess is, the “amunition” (= battery quantities) will be the limiting factor in this battle over the next three years. The demand for sub 40k$, +150miles BEVs will blow the minds of EV manufacturers.

CherylG's_DirtyLittleSecret

What 200 mile EV is $40K?

Speculawyer

Probably the ones that actually ship. Yes, we know that GM and Tesla have promised lower prices than that . . . but let us see if they can deliver.

wavelet

GM is saying $30K after incentives, which $38-$40K before incentives depending on state. Close enough.
Tesla (AFAIR) has been informally (tweets don’t count as far as actual announcements) saying $35 before incentives for the Model 3… But I fully expect the 3 will have less range than the S/X, at least for the lower tier, to maintain differentiation.
If a 150mi Model 3 will sell for $35K, a 200mi version for $40K sounds reasonable to me (pre incentives).

Ziv

wavelet, I think you are right. Elon may over-promise, but he usually delivers close to what he said he would. I doubt a 200 mile III will cost $35k, and he may even state that “there is no demand for the $35k vehicle so we are only building the $40k vehicle!” Musk has admitted that he is over optimistic sometimes.
Sound familiar? 😉
But the III will get delivered and it will be a fun car to own. The question is will it be 2017 or 2018? Musk has stated that he may not be able to build enough III’s to “satisfy demand” until 2020.

http://www.latimes.com/business/autos/la-fi-hy-affordable-tesla-may-take-years-story.html

Nix

At this point I think the bigger question is whether Tesla will make it to market with the Model III before the House Republicans axe what they consider “Obama’s” $7,500 EV tax incentive.

wavelet

Even if congress doesn’t kill anything, AFAIU from estimates on InsideEVs, Nissan & GM will likely hit the 200K unit limit for incentives sometime in 2017, and Tesla quite possibly the same (they plan to sell ~55K cars this year, probably another 100K in 2016) — before the Model 3 starts significant sales.

Ziv

The Energy Security Act of 2007 passed with bipartisan support. As Wiki puts it, “The revised Senate bill passed 86-8 on December 13. The House approved this final version 314-100 on December 18, and President Bush signed it the following day.”

As the GM bailout fades into the past, GOP opposition to electric cars is waning. It isn’t as visceral as it was 2 years ago. And getting any bill that defunds it past Obama will be impossible anyway.

The credits have done their job. We have electric cars and their prices have dropped enough so that even if they went away next year, electric cars are here to stay. Having them until 2017/2018 in the full amount and then $3750 for 6 months after that is good enough. And take a look at the bills verbiage regarding how the timing of the reduction of the tax credit is going to work, there is a lot of room to game the system for an extra several months by timing the sale of the 200,000th car.

Nix
Ziv — Yes, I am aware that the original bill passed with bipartisan support before Obama was elected. So did the ethanol mandate, and the DOE loan programs for solar, wind, and green cars. All passed by bipartisan massive majorities and signed into law by Bush. That doesn’t change the fact that any green law are NOW regarded by the current Republican Party as “Obama” programs. Heck, the EPA was started by Nixon, but it is also tagged by (R)’s as an evil socialist democratic party nanny state organization that they have openly called for eliminating. Here is what the current Republican 2016 proposed budget resolution says about Green Energy programs (Hint: It guts absolutely all our progress over the last decade or two and replaces it with the “free market” and more oil/gas): Energy • The United States is on track to become energy independent within the next 10 years. Achieving this will pay extraordinary dividends not just for our economy but also for our national security. This budget encourages further exploration of oil and natural gas both onshore and offshore in North America on both private and public lands. • The private sector is clearly leading the way… Read more »
Lensman
Tesla has not “promised” a $35k Model ≡. It’s usually referred to in articles as a “$35,000 car”, but if you look at actual quotes from Tesla spokesmen, the price is generally estimated (not promised) at $35k-40k. Given that invariably (can you cite even one exception?) as plug-in EVs get closer to actual production, the price goes up and the real-world range goes down, I’ll be happy if the base price for the Model ≡ is no higher than $40k. My -guess- is that it’s gonna be slightly higher than that, before any Federal and State rebates & incentives. But don’t think I’m singling out Tesla here. That price “creep” is going to affect all those nominally “200 mile” EVs from other auto makers, too. Based on past performance by the various companies, my prediction is that the Model ≡ will cost more than those nominally “200 mile” EVs, but will have a greater real-world range, and will be perceived as having a higher value by owners. I expect Tesla to remain the “leader of the pack” in EV tech, at least for several years. (Note that includes my assumption that Apple will not actually manufacture electric cars, but merely… Read more »
Nix

The other direction of creep has always been Manufacturer provided range numbers vs. EPA range numbers. All of the EV’s in the “Economy car EV” circle in the graph all claimed to be 100 mile range EV’s before the EPA rated them lower.

I’m guessing that lots of companies will soon announce 200 mile range EV’s, and the EPA will end up rating them in the 160-180 mile range.

Part of this will be due to the California Carb ZEV credit system. They use the old EPA test cycle to determine how many ZEV credits a car gets. They get 1 more ZEV credit for getting 200+ miles of range on the old EPA test cycle. This translates to about 160-180 miles of range in the new test cycle. I’m betting that many of the car makers will try to limp in just above that line in order to get that extra ZEV credit.

That is how they will keep their “200 mile” range EV under $35K.

Ambulator

The Chevy Bolt. It doesn’t exist yet, but this article is talking about the future.

Someone

The ones released around 2018

pjwood1

The heading implies ESS growth, for home use is what I thought. With a couple pilot programs using Volt, or Leaf, batteries and with investment banks (Barclays) downgrading the utility sector on PV-battery ESS growth, this thesis is easy to buy into.

Lustuccc
Assuming that the cost of the kWh is the main pretext to sell EVs with a very high price tag, assuming that the car cartel is lying about it, assuming that 4 years ago Tesla achieved a very efficient pack with a 100-1000 times less money, engineers, facilities, means than any of the big car corp. with ordinary laptop batteries, and assuming that we can only speculate on the real cost of kWh companies pay(or would have paid) with economies of scale, including Tesla, and considering what Elon musk and JB Straubel said about economies of scale and new technology, we can be sure that a 100-150$/kWh is easy to achieve right now. Autumn 2014: JB Straubel : “I’d be pretty shocked if there were any major improvements that were close enough to commercialization that we haven’t been aware of or found out about.” E Musk : “We felt comfortable with at least a 30 percent reduction in cost just based on the location[of the GF] and economies of scale. That’s without taking any technology improvement into account, and we’ll certainly do technology improvement. If we can’t get to 30 percent WITHOUT technology improvements, someone should shoot us, because that… Read more »
Nix

Don’t get confused between CELL pricing and PACK pricing for batteries. They are two completely different numbers.

Elon is talking about cutting the cost of the battery cells by 30% using the Gigafactory. But cells are only part of what makes the battery pack, so the price of the pack won’t come down as substantially.

Lustuccc

How do you know that musk was talking about cells? or packs? From what I read, he was talking about the cost of the kWh.

Lustuccc

And the economies of scale will affect the cells, the packs and the kWh 🙂

Lensman

Lustuccc said:

“…we can be sure that a 100-150$/kWh is easy to achieve right now.”

Maybe -you- are sure, but I’m certainly not. Estimates of what price EV makers are paying for battery cells vary widely, and I have yet to see any “insider info” which would give an exact cost from any of them. Also, I suspect you’re thinking only of the cost to the EV manufacturer for the battery cells; the per-kWh cost of the assembled pack is considerably higher, usually estimated at twice the per-kWh cost, but probably slightly less than that.

Brian

That plot really highlights the value of the Soul EV; it has the best range/$ figure of any of them (although the 500e is close). And Ford’s Focus EV is the worst (again, the i3 is close, but it also has other advantages over the Ford).

Speculawyer

The 500e needs a fast-charge port.

Brian

Very true. It also needs to be more widely available. Kia at least looks like they are going to expand into other markets once they get their battery supply straightened out.

Nix

The Fiat also needs a CEO who actually wants to sell EV’s.

Speculawyer

Well, apparently his hatred has been overridden by other elements at Fiat/Chrysler. Chrysler is working on bringing some plug-in mini-vans to market.

Mark Hovis

Great point Brian. The placement of the battleground circle makes you wonder about changes in the existing market.

Ziv

I am kind of surprised that Nissan hasn’t delivered a Leaf option for more range. Getting past 100 miles of EPA AER would be a significant coup. Going from 84 to 100 miles would take around 5 more kWh, which would seem to be doable, even with the Leaf’s current design.

Lensman

I don’t understand that either. After boldly entering the BEV market with a car priced below cost (original estimates were that Nissan planned to start making a profit only in the 3rd year of production), and doubling down on that investment by building battery factories and Leaf factories in Tennessee and the UK… they then didn’t make any improvement to the Leaf’s range, not even offered as an option.

My -guess- is that Nissan discovered it was going to be even harder to make a profit on the Leaf than they originally thought, and that they have been waiting (just like other auto makers) for the per-kWh price of batteries to come down significantly, before designing a truly next-generation plug-in EV.

At any rate, it looks like in another 2-3 years we should finally see some EVs on the market with the potential (and the range) to push the EV revolution out of the “early adopter” stage. At least, I hope so!

ffbj

Probably the most interesting development to hit the transportation sector since the first truly mass production vehicle, the Model T.
I think the Model S p85 D, should have gotten car of the year, as it is a better car the the original p85, but it was a strong tremor and not as earthshaking,(which is what the mass-market under 40k car will be), as the shock and awe that followed the release of the original Model S.

zoe-driver

I think we should talk about the 200 mile sub 25.000$ car, like ZOE. Actually ZOE costs 28.000$ with 26 kWh (UK, Norway). I expect a price drop not an increase.

Stimpacker

Pfff, Lux Research hasn’t published a single good piece of real research. If you follow their work, you’ll know what I mean. They have green PhD’s.

Scott Franco

$40k??? ouch.

Bonaire

$40K is a hard sell when the buyer has to consider the issues associated with “taking the plunge”. That can include winter weather range loss of up to 30% or more, in-home charging installation (maybe $500-1000), the limited range and tethering to a charging network, possible lack of charging at workplace parking, home pricing of electricity may not be favorable over current gas prices, etc.

EVs are wonderful. Thing is – it is like saying “everyone should eat Prime Rib and shop at Whole Foods – they’re great!”. Consider the population, their income levels, their desires and current budget. In the USA, for example in San Francisco, it is considered middle-class if you make $250,000 or more. It is hard to live in the Bay Area under $100,000 a year. Considering a $1000/month car payment or $500/mo lease just to get into an EV is hard to justify unless you are a hard-core green enthusiast or just want to try out new technology and don’t have a family or other big expenses.

Lensman

Amazing, this is the first forecast related to the EV market by Lux Research which appears to be actually well informed. Maybe they paid an outside firm to do it for them? 😉

George Bower

The new GM Bolt 200 mile EV is definitely on my shopping list. I’d like to see one in person though. After 3 years with the Volt I’m wondering if it will seem “too small”. Kdawg’s seen one and doesn’t think so. Bring it on GM.

Steven

If it has that, seats four, has a usable trunk, and charges in less that ½ hour, you won’t be able to keep them in stock

DjHan

BYD makes the solar panels,the battery storage unit for the garage and affordable EV’s. When they bring the BYD Qin(PEV) stateside this year and I can buy the solar panels,battery storage and the car in a package deal I will be rid of the electric company as well as the gas station all at once. Sign me up.

jzj

EVs are only one part of the equation being discussed. The two other parts are the vehicle-to-grid charging stations and utility infrastructure that can take advantage of it. As to the V2G, this requires a fast-charge port on the car and appropriate vehicle protocols, and while these have been demonstrated they are not commercially available. As to the utility infrastructure, well, smart-meters and time of use rate structures and pricing incentives are necessary, and few utilities in the country are presently equipped to enable this (I’m not sure all the grid Independent System Operators and FERCs across the country are even considering the implications of V2G let alone planning to enable it).