Electric Cars To Cost Same As, Or Less Than ICE Within A Decade

FEB 19 2015 BY ERIC LOVEDAY 67

Nissan LEAF

Nissan LEAF

Within the next decade, the cost of electric cars will equal or undercut ICE automobiles, according to Deutsche Bank analyst Rod Lache.  This downward movement in costs will “serve as a catalyst for significant expansion” of electric car sales.

Lache made these comments in a note sent to his clients.  According to Lache, there are two factors that could eliminate the cost gap.  Quartz describes these two factor as follows:

The first is that battery prices are expected to drop by more than half to $100 per kilowatt hour—not because of a scientific leap, but due to engineering improvements and economies of scale, particularly at Tesla’s “gigafactory.” The second factor is that combustion engines will get a lot more expensive, Lache says. US gasoline efficiency standards, which require that light vehicle fleets average 54.5 miles a gallon by 2025, will incur added costs of $2,000 to $2,600 per vehicle. That will raise the total cost of a typical drive train—an engine, transmission, and fuel and exhaust system—to $7,000 to $7,600 per vehicle in the United States, he writes.

As for electric car costs, Lache says that using the $100 per kilowatt hour cost that Deutsche Bank expects, to see within the next decade, a 47 kilowatt-hour battery pack would cost only $4,700.  Add in electric motor cost and you’ve got a complete powertrain for ~ $6,000, claims Lache.

Interesting figures to say the least.

Source: Quartz

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67 Comments on "Electric Cars To Cost Same As, Or Less Than ICE Within A Decade"

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Why a decade? The gigfactory is expected to achieve around $100 kWh when built. In 5 years Tesla would be producing packs for that much.

I guess that’s just Tesla though. For other auto manufacturers to achieve that they have to wait for the other battery manufacturers to bring their cell costs down as well. So you could say, Tesla EVs as cheap as ICEs in 5 years, all EVs cheaper than ICEs in a decade.

You know, this is something I’ve wondered about. What if other manufacturers aren’t able to compete with Tesla’s battery costs? I wonder if Nissan and GM could be buying their batteries from Tesla? Or more specifically, from Panasonic who could be manufacturing them at the gigafactory?

Most likely LG will be running down the same cost curve, just not under one roof. And we haven’t yet felt the full weight of low cost Chinese battery manufacturing.

What Tesla is doing with the GigaFactory is important for their plan, but it does not preclude others from pursuing the same cost reduction objectives.

If the CARB had not been defeated by Bush and the Oil-auto cartel in 2003, it would have been a decade AGO that EVs cost less than ICE, Massively produced.

Lol! Marketing people are professional liars by definition!

Lustuccc said:

“If the CARB had not been defeated by Bush and the Oil-auto cartel in 2003, it would have been a decade AGO that EVs cost less than ICE, Massively produced.”

No. The government can’t mandate technological advances. It can help create an environment to help stimulate such advances with incentives, rebates, and R&D grants, but R&D advancements happen when they happen, and not before. “Who Killed the Electric Car?” got one very fundamental thing wrong: Batteries were not “ready for prime time” in the days of the EV1, and they’re still not quite there.

CARB keeps making the mistake of getting out ahead of the technology, most recently by foolishly supporting hydrogen fuel.

I tried 5 times to answer you with links but it doesn’t work!

Lensman, as I pointed you many times to the web sites, batteries from 1999 had at least in 3 cases 200ish miles range.

Don’t you get it that all big ICE car makers DON’T WANT TO SELL EVs and make up all these price availability and technical issues?!?
Marketing is a very fine tuned science you know and decennals plans are common place.

All you have to do is read the links to see how screwed we are with all these weak hybrids and *apparent* lousy demand for EVs, by big car corporations.

Links to follow?

wwwDOTtoyotaDOTcom/esq/vehicles/electric-vehicle/ev-history.html

wwwDOTgreencarreportsDOTcom/news/1036152_nissan-altra-a-look-back-at-the-worlds-first-li-ion-powered-ev

wwwDOTevchargernewsDOTcom/CD-A/gm_ev1_web_site/specs/specs.htm

(click on “specifications” at the bottom.)
(Copyright 2001 General Motors Corporation. All rights reserved.)

Just as a point of interest, the only times comments with links go into moderation is if you have more than 2 of them

…so if you don’t want to wait for someone around here to fish it out – just do 2 a time, that way you don’t need the fancy “DOT” spaces, (=

Aaaah! Thanks!

Lustuccc said: “Lensman, as I pointed you many times to the web sites, batteries from 1999 had at least in 3 cases 200ish miles range.” Just because someone could build a prototype BEV which, if driven slowly and/or using hypermiling techniques, could go as far as 200 miles, is absolutely -no- indication that any auto maker could make a BEV that would reliably go more than 100 miles while being driven like normal drivers do, even in subzero weather, and could sell that car at a price which would (a) make a profit, and (b) actually be competitive with gas guzzlers. There’s reality, and then there’s wishful thinking. On very nearly -every- subject, you can find those on the Internet who prefer wishful thinking to reality. But that does not actually -change- reality. Lustuccc continued: “Don’t you get it that all big ICE car makers DON’T WANT TO SELL EVs and make up all these price availability and technical issues?!?” Certainly I “get” that no legacy auto maker wants to make EVs that will actually compete with the gas guzzlers that the company has sunk so much money into making. But that doesn’t mean they are “making up” technical issues.… Read more »
Sorry i confused miles with kilometers it is 125 miles, not 200. Before accusing me of being disconnected from reality, maybe you should take the time to really read the links I provide. http://www.kingoftheroad.net/charge_across_america/charge_html/nimh_test2.html This is a real torough test drive in real life by a real person of not a prototype, but one of the 1500 production cars that GM destroyed on purpose. This is from the genuine GM specifications information sheet. I put earlier : “0-60 mph acceleration in less than 9 seconds Electronically regulated top speed of 80 mph (129 km/h) 0.19 aerodynamic drag coefficient (25% lower than any other production car) Estimated Range*: Standard: High-capacity lead-acid battery pack – 55 to 95 miles per charge* Optional: Nickel-metal hydride battery pack – 75 to 130 miles per charge* Estimated Energy Consumption Information (kW/hr per 100 miles): Standard: High-capacity lead-acid battery pack – 26 city/26 highway Optional: Nickel-metal hydride battery pack – 34 city/30 highway Estimated Time from Zero to Complete State of Charge at 70 degrees with normal humidity: Standard: High-capacity lead-acid battery pack – 5.5 to 6 hours using the 220-volt (6.6kW) charger; 22 to 24 hours using the 110-volt (1.2kW) convenience charger Optional: Nickel-metal hydride… Read more »

” the EV revolution would have taken off in a big way in a previous generation.”

How can it be if GM Toyota, Nissan, Honda (who destroyed the EV plus) and others cease to produce BEVs and glorify the Prius instead !?!

And this plan to replace good BEVs with hybrids was intended by the automobile cartel during the Clinton administration.

Technical problems are NOT real. This is P.R. lies to delay as much as possible the rEVolution.

If not of Tesla, 200 miles electric cars would be off by 10 years, not 2.

Explain how the BYD e6 has a range of 200 miles? Germans and americans are supposed to be experts in the making of cars? They are all sunk by a chinese battery company, making cars for only 10 years?!?
and what about all the garage adaptations that surpass big corporations for 20 years!

There’s a reason Tesla didn’t use lead-acid or NiMH years ago. You can’t make an appealing EV with either tech. Lithium-ion has the bare minimum combination of energy density and cost, and that only arrived recently.

Moreover, gasoline was really cheap until 2005, so EVs just didn’t have much potential before then beyond a really tiny niche.

Only later did battery improvements from the mobile revolution (in both density and cost) coupled with high oil prices did EVs appear to have long term potential for 10%+ of the auto market.

In 1999 Toyota RAV4-EV and GM EV1 had Ni-MH batteries with more than 120 miles range. Ni-MH batteries have a long life as we see in 12 years old Priuses.

Sorry I mixed miles with kilometers, this is 120-125 miles, not 200.

Hydrogen is the most plentiful stuff in the universe. We’ll never run out of it. I think it is the future fuel and energy. It’s as easy to transport as propane and my whole town heats their home with propane.

pHwahahahahahahaaaa

You fail Thermodynamics 101.

Too expensive: the fuel ($4 a gallon equivalent), the cars, and the filling stations (billions of dollars to build enough of them). EVs are much cheaper: the fuel ($1 a gallon equivalent) and the cars. No filling station infrastructure needed because recharging can be done at home.

No other EV maker is taking Tesla’s approach of using thousands of small cells to build a long-range EV battery pack. Even if some other EV maker decided to follow Tesla’s lead in that regard, it’s unlikely they would design any car intended to sell in large numbers around Tesla cells. That would be like Ford building cars using GM motors. (That’s a generality, and there may be exceptions; but never an exception with any auto maker’s better selling models.) No auto maker is going to make itself dependent on a competitor for a core component of any car it actually plans to sell in large enough numbers to make a significant profit. It’s true that both Daimler and Toyota (with the RAV4 EV) used battery packs made by Tesla in an EV, but in both cases that was just a compliance or “test market” car which the EV maker had no intention of making in large numbers, or for many years. In other words, in those cases the EV maker paid Tesla to supply a limited number of battery packs, because that was a way to minimize the development cost for a car model they knew would lose them… Read more »

“GM and Nissan have both build their own battery factories. My understanding is that they both plan to turn to LG Chem for their new “200 mile” EVs, but expect that to be a temporary situation, only until GM and Nissan can produce similar cells in their own factories.”
———–
GM only puts the cells into the battery pack. LG makes the cells (in Holland MI). I don’t think GM has any intention of getting into the battery cell business. They would rather evaluate all of the technology in their huge test center, and go with the technology that best works for their application.

kdawg:

Thank you for the correction.

If and when GM finally gets serious about making compelling EVs in large numbers, we’ll see if they continue to rely on an outside vendor like LG Chem, or if — like Nissan and Tesla — they decide to build their own battery cell factories.

I think those Western (i.e. non-Asian) companies serious about making and selling large numbers of EVs will make their own cells, for the same reason that legacy auto makers make their own gasoline engines. I don’t think they will be willing to rely on an outside company for such a core component of a plug-in EV.

But I could be wrong. Just like everybody else, I have no crystal ball that gives me a clear vision of the future.

For many year BMW used GM transmissions.

The Gigafactory is expected to reduce cost of battery cells by 30% in 2017 and 50% in 2020 when production is expected at full capacity.

Estimated cost of current Panasonic cells for Tesla range from $180 kWh to $240. There are some estimates that are higher but that is absurd.

Best case scenario is still $126 per kWh in 2017 for the Gigafactory and $90 per kWh in 2020.

“Why a decade? The gigfactory is expected to achieve around $100 kWh when built”

That is overly optimistic.

Early 2014 finished pack prices are about $280/kWh for Tesla. This is the baseline from which Elon measured “at least 30%”. This means a 30% reduction from that takes them down to $196/kWh when the GF opens. If they get up to a 50% cost reduction by 2020, that’s $140/kWH. It would take another few years (perhaps to 2025) to get to $100/kWh.

For Tesla, $140/kWh is still great from an economics standpoint. A 200 mile pack for a regular sized card would be $7,000. Plus motors and chargers would be around $10,000. Then they just need the chassis, interior, paint and assembly to come in under $16,000 to reach a gross margin of 25% on a $35,000 car.

Anthony said:

“Early 2014 finished pack prices are about $280/kWh for Tesla. This is the baseline from which Elon measured ‘at least 30%’.”

Hmmm, no, I’m pretty sure Elon was talking about the Gigafactory producing cells at a price point at least 30% below the cost of buying cells from Panasonic, not the cost of the finished battery pack.

Well to be fair it says within the decade. Which can mean anything from 1-10 years. Another example of the imprecision of language. He could say circa 10 years from today.

Yessss,

according to some other studies,

this will happen somewhere between 2020 and 2025

With the tax credits, and with the right driving patterns, EVs can be cheaper right now. And now that a used market exists, you definitely can come out cheaper today.

As for the base price alone without the energy savings, I do believe it can be reached in a decade without any new battery breakthrough.

And not saying that you could not some day buy a 47kWh pack for $4700, just that we have to specify whether the $100/kWh is cell level or pack level.

Either way, the moral to the story is EVs win!

Of course there will be some insisting on buying a ICE or FCV declaring that they bought it because it was faster to fuel as your drive past them while they are still fueling…..

ah for an edit button…

Deutsche Bank is talking BEVs comparable to similar priced ICEv. No * with right driving pattern stipulations.

Sub 100 EPA mile BEVs are not comparable to similar priced ICEv.

A 2015 LEAF is not comparable to a $29k 2015 Altima.

I’d rather take the Leaf already today. But the article is saying that a 200 mile EV (47kWhr) will be cheaper than its twin ICE. By then is suspect most people will seriously consider their next purchase to be an EV.

Indeed. Right now you can buy a used EV or PHEV at a ridiculously low price. The “too expensive” myth is busted.

What are we comparing to what? Needs to be defined. There are ICE cars that cost $2 million, same goes for EVs. My Volt rides better than a BMW, but didn’t cost as much.

Now that we have the Kia Soul EV and Golf electric, we can compare apples to apples. There is a large gap between gas and electric prices of similar equipped cars. When this goes down to zero, market will take off!

But wouldn’t you say there is also a large gap between owner experience (and trim) of those cars? It’s not really apples to apples.

Great point. Both the Kia and the Golf are top-end spec’ed out cars. Compare a loaded Golf to an eGolf for a more accurate comparison of price.

Golf TDI SEL starts at $28,395.
Golf 1.8T SEL starts at 27,395.
eGolf SEL premium (the only trim level currently) starts at $35,445 before incentives. $27,945 after inventives.

That’s an awesome comparison Aaron!

Focus Electric costs $10,000 less than the comparably equipped Focus Titanium.

Looking at just the MSRP is not a valid comparison. The number to compare is TCO, including externalities (emissions). The reason a $28,000 Leaf costs a typical purchaser $18,000 is because the community rewards people who don’t pollute.

As kdawg points out, you also get a better drive experience, and that has value.

50 more miles of range on most EVs dispenses with any need to charge outside of home except for trips out of town.

While I think most EVangelists will agree that car buyers should consider Total Cost of Ownership (TCO), the sad fact is that most consider only purchase price vs. perceived value.

EV sales will start to accelerate significantly, and eventually overtake gas guzzler sales, only when the average car buyer perceives that the EV has equal or greater value than a gas guzzler of comparable price.

But we can help increase the “perceived value” by getting as many as possible to test drive a plug-in EV, so they can experience for themselves how much better the driving experience is.

electric-car-insider.com

+1

Sorry to burst your bubble, but the consumer just doesn’t care about externalities or everyone would already own an electric. Or better yet, they’d eschew cars altogether. A lot of Millennials are already doing exactly that, but the number doesn’t even come close to “most”, even in that most eco-conscious age group.

electric-car-insider.com

No bubble BLT. The externalities are levelized by incentives. Should be point of purchase rebate, but if you lease, that’s essentially what you get. $199 is a pretty good deal for a new car with the typical trim level of an EV.

Not all states have a kicker, but that’s a matter of political will – agitation mostly.

A total of $10k off, as in California, is just about right. Quick charging and 50 more miles of range and most people will find that a pretty compelling proposition.

Solar on the roof, net metering and the fuel is nearly free for life.

The TCO of that deal just needs to be explained. People get it if you walk them through the math.

And, let us not forget, that the current price of EVs in the US is bolstered by the tax credits. For example, take a Leaf S bought under the VPP program (basically Nissan’s “friends and family” promotion for military families and employees of various companies). A Leaf S bought under that program knocks $2,600 off the price. If financed via NMAC with the current promotion, the one that Nissan keeps extending one month at a time, slices another $3,500 off the price. That brings the price Nissan receives down from $29,000 to around $23,000. The cost to the consumer is $7,500 less, and even lower in some states. Does anyone here think Nissan is losing money on those sales at $23,000 a pop? I don’t. As I’ve pointed out here before, imagine an ICE Leaf S that sells for roughly $20,000. Subtract the cost of all the parts — and there’s a LOT of them — you’d pull out to make an EV. Then add the cost of the EV pieces. I’d guess that you’d get a number pretty close to $20,000. One of the problems car companies are wrestling with regarding EVs is pricing. If you introduce, say, the… Read more »

“Does anyone here think Nissan is losing money on those sales at $23,000 a pop? I don’t.”

I do. Nissan has to amortize the development costs for it’s first generation EV. Those development cost are substantial.

Precisely. The established ICE industry has sunk development and tooling costs. Autos only have any margin because this super-scaled industrial ecosystem pump is already primed. You’d have to wait 20 years at today’s prices if you were starting afresh.

EVs are sort of a reboot. Not a total reboot. And the end result of the reboot genuinely reaps huge cost savings. But the up front costs are real.

*at today’s prices…in order to make a profit…if you were starting afresh.

sven:

Well said.

Nissan originally estimated they’d start making an overall profit in the third year of selling the Leaf. But the car didn’t sell as well as they expected, so they had to slash the price by several thousand dollars.

More recently, they’ve built new factories in the USA and the UK to help bring the per-unit cost down for selling in those markets. So on a per-unit cost vs. price basis, I suspect they are now making a profit. But if you include the price of building those new factories, plus the other development costs for moving from making gas guzzlers to making EVs, it will be quite a few years before the Leaf model makes an overall profit.

Fortunately, Nissan can also make other car models in those factories, so not all the development cost has to be defrayed by the Leaf alone.

This argument just makes sense… now that many of these manufacturers (Nissan and Tesla) are putting in place the teams, parts and production processes for EVs the costs are bound to come down. Nissan Leaf is in line to be the Model T of the EV world. Seems on a path to be the simpler Prius. A basic get around car that saves folks a load of money to operate. Unlike Prius and Volt, it is a much less complicated machine. Less parts… less wear items, lower costs of ownership. When the gov subsidies run out Nissan says it is OK. Why? Because they have already begun to amortize the costs across multiple models and part lines. They have created local factories to get around currency volatility and are ready to crank them out now that the markets have recovered from the 2007-8 debacle and the horrible tsunami that nearly destroyed a large part of Japan. A great next step once the new generation is out would be to offer the electronic powertrains across as many of their vehicles as possible. Pickup trucks, Vans like E-NV200, and Utes. Make it just another option on several vehicles and give the customers… Read more »

Jeff Songster said:

“Nissan Leaf is in line to be the Model T of the EV world.”

Maybe one of the Ford models which preceded the Model T, such as Model N or the Ford Model S. We haven’t yet seen the EV equivalent of the Model T, the “everyman” car. I question that even the Tesla Model ≡ will qualify for that label; $35k-40k is still significantly more expensive than any best-selling gas guzzler.

If what you claims are so true, then why is Nissan dragging its feet in offering another plugin variants?

Why isn’t there a plugin minivan, pickup trucks or crossover from Nissan already since it is so cheap for Nissan to produce it?

There is a plug-in minivan, the e-nv200. So yes, they are expanding their electric offerings.

But you don’t seem to understand the automotive industry is always slow and very capital intensive. Don’t trot out this negative pr as in ‘dragging their feet’. They are simply a business and have to keep an eye on their bottom line. They cannot simply jump headlong into every opportunity they see.

Slow and careful is the modus operandi. Always has been and always will be.

Complete junk. You can’t know if electrics will be competitive unless you know what is happening on the battery front. And you can’t predict that unless you have a working crystal ball. If you have that then you’d have lots of ways to make unlimited amounts of money and you wouldn’t be writing reports.

Hopefully manufacturers will get better at communicating why electric vehicles are premium vehicles. Then if the prices get similar you’ll see a big move towards them. If not then you can sell them.

FWIW in 2007 GM targeted 2020 as when the cost delta for electrics would disappear. So the date has been floating around for a while.

electric-car-insider.com

+1

They do have ways of making money. Conflicts of interest with analysts also being investment firms are a real and continuing problem.

That said, it’s hardly just Deutsche Bank saying this, so you can take it to the (other) bank.

Tesla Model S P85D already is cheaper than similar gas high performance luxury sedans with similar performance.

We can quibble over the details, but the gist of the article is undeniable. The cost of building an electric car will continue to decline in the coming years — probably a lot. Once an EV drivetrain costs a little less than an ICE drivetrain — ICE starts to go bye-bye.

Combine this with total cost of ownership (TCO). Over the lifetime of a car, the savings in fuel and maintenance for an EV are in the ballpark of $15-20k.

So once EV’s reach a solid parity (or near-parity) for purchase price, consumers will be hard-pressed to justify purchase of an ICE car.

average car price 30 +7.5(federal) +5 (georgia) +10 (gas saving) = 52.5.

can tesla produce a 200 mile car for 52.5 today?
not sure why we have to wait for 2020 or 2025.

It is somewhat silly that people dream on 100 dollar batteries where as among luxury car segment 200 to 300 dollars per kWh is more than cheap enoug. In this category there are sold around 4 to 8 million cars per years. This means that today electric car markets could be around 5 million long and ultra long range electric cars per year.

Of course only Tesla is right now investing on R&D of electric cars in any serious manner. Although Tesla’s capital potential is fabulous, it is still just a single company with only 10 000 employees.

“Of course only Tesla is right now investing on R&D of electric cars in any serious manner.”

This’s a joke, right?

Unfortunately it is not a joke. E.g. if you want to sell electric cars that can survive without subsidies, first you need a global fast charging network that is free to use. Secondly you need batteries for million cars per year. And third you need to make actual electric car that is COMPELLING.

The amount of compelling electric cars on markets can be counted with one finger.

+1