We have already discussed the magic number for price parity between electric cars and combustion-engined vehicles: $100/kWh. Achieving it or not, there are electric cars already sold for a profit and some that still need to get there. Benchmark Mineral Intelligence has good and bad news about that. The good one is that cell cost is now at $110/kWh; the bad one is that these prices are taking longer to decrease.
Update: Benchmark Mineral Intelligence revised the numbers and sent us a new graph. The text already reflects the corrected percentages.
Benchmark Mineral Intelligence confirmed the new battery cost by checking a large contract from a car manufacturer. Although it has not revealed with automaker it was, we would bet it was Volkswagen with the MEB platform, with smaller chances that it could also be Hyundai and Kia.
While the new number looks like great news, prices used to fall around 21.6 percent every year from 2014 until 2017. From that year until now, the year cost decrease average is at 7.7 percent. That would be a strong piece of evidence that steeper price reductions will depend more on mining than on technology, according to Simon Moores.
“We could have seen the last of the big easy wins for lithium-ion battery producers in reducing cost. It is now a supply chain game and reducing and stabilizing the cost of your biggest input raw materials such as lithium, nickel, graphite, cobalt, and manganese.”
If we are right about the $110/kWh coming from MEB, there is still hope that other approaches to battery packs can help us reduce the price even more. We are talking about cell-to-pack (CTP), which Nio has used to increase power density, improve space usage, and reduce mass in its 100 kWh battery pack.
Another promising approach is giving up the use of battery modules, such as the MPI (Module Pack Integrated) approach from LG Energy Solution. Tesla seems to be going that way as well with the battery pack that will use 4680 cells, as a recent video showed.
We have asked Moores about these ideas and will update this article as soon as we hear from him. Regardless of the “easy wins” these technologies could bring, he and Andrew Leyland – head of strategic advisory at Benchmark Mineral Intelligence – warned that raw material cost will probably become more relevant than ever.
Scale, technology, and raw materials are the main components of battery prices. Leyland said that there is no geological shortage of the materials needed for cells, which pushes away the concerns that they can be the new oil in what relates to availability, but not environmental impacts.
The issue is that demand is currently being financed. Supply, on the other hand, is facing major challenges. This is why we have written that Tesla could get into the mining business soon: it would be a way to ensure raw materials for its batteries at current or even lower prices. There might not be other ways than vertical integration: the very countries pushing for electrification will not be able to finance mining businesses in countries such as Congo or Indonesia.
The impact mining can have on the environment is not a small one. This is why licensing takes so much time and demands so much money. Perhaps technology will be our best shot at making electric cars more popular, such as PJPEye’s single carbon electrode battery. While it isn't – and Li-ion batteries are prevalent – we will have to think of the best ways to obtain raw materials. Sadly, recycling will only make a major difference between 2040 and 2050, according to Leyland.
Source: Benchmark Mineral Intelligence