The Tesla Gigafactory is the prime example of the future of high-volume lithium-ion battery production, which can only help to drastically reduce battery costs.

The Tesla Gigafactory is the prime example of the future of high-volume lithium-ion battery production, which can only help to drastically reduce battery costs.

Most experts and consumers agree fully that the cost factor of electric vehicles is the main inhibitor of sales and mass adoption. The cost of electrified vehicles is highly contingent upon lithium-ion battery prices. According to a recent study, costs are declining substantially and rapidly, perhaps more so than most of us thought.

An employee at Chrysler's Windsor Assembly Plant readies installation of LG Chem's 16 kWh Michigan-made LG Chem battery

An employee at Chrysler's Windsor Assembly Plant readies installation of LG Chem's 16 kWh Michigan-made LG Chem battery

The study, entitled Global Trends in Renewable Energy, actually refers to the price decline as "spectacular." The Frankfort School of Finance and Management headed up the study, in cooperation with Bloomberg New Energy Finance and the United Nations Environment Programme.

The study shows a constant decline from 2010 to 2015, with a 35% drop from 2014-2015. Reductions are attributed to a variety of reasons, but mainly come as a direct result of cell chemistry changes, adapted manufacturing processes, and aggressive pricing (motivated by production volume and growing competition).

Just recently, Tesla officially began producing 2170 Battery Cells at its Gigafactory. The primary use of the initial cells will be for the company's home Powerwall 2 battery units, and industrial Powerpack 2 energy storage batteries. But, eventually the cells will go into Tesla's upcoming Model 3.

The Tesla Gigafactory is the prime example of the future of high-volume lithium-ion battery production, which will only forward the above-mentioned catalysts for drastically reducing battery costs. The study actually cites the Gigafactory as a contributing factor to the decline, despite the fact that it's just beginning production. Tesla plans to produce 35 gigawatt hours of cells per year by 2018.

is cited as a contributor to reduced battery costs, even though it is just beginning production

is cited as a contributor to reduced battery costs, even though it is just beginning production

The study points out that modern electric cars only began selling in measurable numbers about six years ago. In 2014, global EV sales was around 290,000, and by the end of 2015, sales rocketed to about 462,000. Growth continues, but sources vary drastically on future projections, due to a wide variety of obstacles, including political situations, fuel prices, global conflicts, etc.

  • OPEC predicts 1.7 million electric cars on global roads by 2020
  • Bloomberg New Energy Finance estimates 7.4 million by 2020 (2 million of which will be sold in 2020 alone)
  • Bloomberg New Energy Finance estimates a 35% market share of EVs among all light-duty vehicles by 2040
Obviously, there's no way to know if either estimate is even close to reality. However, significant and continuing reduction in battery costs will put an end to the primary deterrent. Then, it is just a matter of time.

Source: Green Car Reports