A lot of people whined about our AAA articles that revealed how big a concern depreciation can be for EV adoption. They were also mad that MotorTrend did not mention the reasons for fast charging rates to be so high to the point of being another relevant point for consideration. We are not sure how charging companies will make fast charging cheaper than filing up a fuel tank, but Sandy Munro helped us see more clearly why depreciation is a big burden for EVs. The engineer did so by revealing how much of their cost is concentrated on the electric powertrain.
You can either see Munro present the numbers himself in the video above – something we vividly recommend – and also check an image he has prepared for his interview at Autoline After Hours. It is this one below.
More than getting surprised that 51 percent of the cost of an EV is concentrated on its powertrain, compare that to the costs of a combustion-engined vehicle. Munro and his wife, Susan, also included them in the presentation.
You read that right: only 18 percent of the costs of an ICE vehicle are due to its powertrain. Most of them are concentrated on “body exterior” – 25 percent – while “interior” accounts for 24 percent of the costs.
Munro clarifies that battery packs, inverters, and controllers are as much part of the EV powertrain as are the motors and any transmission an EV decides to use, such as the Porsche Taycan's. Anyway, if he broke down the powertrain components' share in the total cost, the battery pack would undoubtedly be responsible for most of it.
That brings us to our warning at the AAA articles concerning EV adoption: While battery pack prices are not treated as a matter of utmost priority, people will mostly buy EVs if there are incentives for that. And will get rid of them as soon as the battery pack gives any sign of failing.
More than the automakers selling replacement battery packs at reasonable prices – neither €30,000, as Nissan did for the Leaf, nor €23,335.53, as PSA did for the Peugeot iOn – we need aftermarket companies interested in selling them as well.
Without competition for these new battery packs, the owners of older EVs will be held hostage by the prices automakers decide to bill. These customers will see all the investment they made on a new EV go down the drain if batteries fail out of warranty. If these consumers can afford a new car, they will throw the current one to the junkyard. If they can’t, they will have to give up personal transportation altogether or get back to ICE vehicles. Only oil, bus, and train advocates will celebrate that.
One possible solution for that is the revolution that is always on the verge of happening with batteries. Solid-state, lithium-sulfur, you name it: all of them promise to be cheaper, lighter, safer, and more energy-dense than lithium-ion cells. But you cannot rush science, and the promise to get this sorted is always two steps ahead of where we are. Perhaps even more.
A more feasible way to deal with that is battery swapping. NIO has already convinced Tom Moloughney that this solution works. The problem with it is that it puts the burden of failing battery packs on the back of automakers, and most of them are not willing to take it. Even Renault, which used to rent the batteries on the ZOE, is now cutting that option. What if this business model, with the current technology available, is faded to fail?
The AAA survey had no Tesla included. The vehicles from the American EV automaker do not present depreciation problems so far despite the many manufacturing issues they have. Even Munro said the company does not do well with the “dinosaur technologies.” How is that possible?
The explanation is that people trust Tesla batteries. Tesla’s management system is brilliant, according to Mark Ellis, from Munro & Associates. But what if that does not remain true in some years? What if the update that restricted range and supercharging speed really conceals more severe problems with the batteries, as the lawsuit against the company claims?
If there is an issue with Tesla batteries, how much will it cost to replace them? Worse still: Will they be like the MCUv1 replacement, slated to happen again every once in a while?
Munro shows that anyone committed to promoting EV adoption has to talk about battery packs. We need them cheaper and more reliable. If their prices fall, EVs will become the logical choice. We would still have to address high rates for fast charging, but that is not a discussion we can have based on this useful presentation the engineer did. Perhaps with a future one...