International Energy Agency: World Spent $8.7 Billion to Reduce Battery Costs by 50% in 5 Years

5 years ago by Eric Loveday 5

IEA Global EV Outlook Graphic - Click to Enlarge

IEA Global EV Outlook Graphic – Click to Enlarge

Energy ministers from around the globe met at the 5th Clean Energy Ministerial (CEM) in New Delhi, India from April 16 -18 to discuss clean energy technologies and global investments in programs designed to reduce greenhouse gas emissions.  All told, 23 countries were represented at CEM this year and, for the first time ever, a Global EV Outlook report was a main part of the conference.

IEA Global EV Outlook

IEA Global EV Outlook

Presented by the International Energy Agency, the extensive Global EV Outlook touched on all sorts of aspects of electric vehicles, but what we found most intriguing was the portion of the report that focused specifically on battery technology.

Before focusing on the battery technology aspect of the report, we’ll quickly summarize a few other notable highlights:

  • Between 2011 and 2012, sales of plug-in passenger vehicles more than doubled
  • Plug-in vehicles today represent 0.02 percent of total passenger vehicle supply
  • The Electric Vehicles Initiative listed in the report includes 15 member governments with a goal of deploying a combined 20 million passenger plug-in vehicles by 2020
  • Barriers for plug-in vehicle adoption include mainly lack of infrastructure and lack of demand
  • Plug-in vehicles are considered essential to shield economies from fluctuations in the price of oil

Now for the battery technology discussion.  For the first time ever, there’s a figure on what it costs to reduce battery prices.  According to the Global EV Outlook, governments and organizations around the world spent a combined $8.7 billion since 2008 on research and development aimed specifically at reducing battery costs for plug-in vehicles.  The result of this spending is that battery costs dropped by “more than 50 percent” over the last five years.

One of the biggest hurdles for plug-in vehicles is cost.  The battery, which is easily the most expensive single component in an electric vehicle, amplifies the cost.  If battery costs continue to be cut in half every 5 years, then soon electric vehicles will be just as cheap to manufacture as conventional automobiles.

The only downside here is that the initial spending ($8.7 billion from 2008 through the end of 2012) has to keep coming from somewhere in order for battery costs to continue to drop.  And our thinking is that, over time, spending will decline, which would mean that battery costs won’t drop at such a rapid rate, but maybe as word of this report spreads, automakers, governments, battery developers and other organizations will realize that their spending and combined efforts truly pay off.

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5 responses to "International Energy Agency: World Spent $8.7 Billion to Reduce Battery Costs by 50% in 5 Years"

  1. Mark H says:

    Lets see, the world spent 8.7 billion over five years and have reduced the key component of EVs by 50%. During that same period the USA alone spends 50 billion annually just in keeping the shipping lanes open for oil. 8.7 – 250? I call that a bargain.

    1. GeorgeS says:

      and I’m not sure we need to keep spending at that rate anyway. We don’t need a “break thru” battery design. We need economies of scale.

      The other thing we need (and Bob Lutz back me on this ) is a gas tax. Gas is too cheap.

  2. kdawg says:

    $8.7 billion / $30K = ~ 300K EV’s that could have been purchased, more that 6x what were sold in 2012. I’m all for advancing battery tech, but maybe sales would help manufacturers reduce cost by scaling up the manufacturing process.

    1. zilm says:

      Governments never able to spend money efficient. That’s why private initiative rules the economics and progress. The only way of lowering battery costs is economy of scale, not the feeding of grant-eaters with new money, they are too far from real production. Every company producing the batteries have it’s own R&D spending on which increase with overall sales.

      1. kdawg says:

        I don’t like the word never, so to play devil’s advocate, and say there are exceptions to Government spending (NASA, Manhattan Project), and economy of scale is not the “only” option. I was just pointing out that it was one of the options not really covered. It needs to be attacked on both fronts. As cost goes down, demand will increase, and economy of scale will further lower costs….. snowball (just have to keep it rolling).