New Energy Department Battery Target: Shocking Drop To $60/kWh

Not long ago, it seemed $100/kWh was a big stretch. Just 4 months ago, the target was reduced to $80/kWh.

tesla battery pack 2

Steven Loveday

By: Steven Loveday

Apr 27, 2021 at 12:55pm ET

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The number one reason for slow is arguably price. Many people simply don't want to spend a bunch of extra money to get an EV. As battery prices drop, the whole market is going to change for the better. Once battery prices drop enough, EVs will be able to reach price parity with gas-powered cars. Aggressive energy department targets provide plenty of promise.

According to a recent report by the Mobilist, last summer, the EV industry finally started to see the light at the end of the tunnel with regard to lithium-ion battery prices. It seems the long-term goal of $100 per kWh is possible, if not already in place, at least in some cases. Tesla CEO Elon Musk said EVs can only truly "penetrate the mass market" after another 40% drop in battery costs. That would work out to about $56/kWh. More recently, Volkswagen suggested a goal of about $60/kWh.

Fast-forward to around four months ago, and, according to the Mobilist, the Energy Department dropped its federal target to $80/kWh. This was an effort that was part of the department's “Energy Storage Grand Challenge," which the publication says may have been influenced by Tesla's and VW's lofty goals.

Now, just this week, the department has dropped its target yet again, to a shocking $60/kWh. Moreover, the department’s director of the Office of Vehicles Technologies Dave Powell told the Mobilist that the new price target "more closely approximates the total cost of the combustion drive train." We're talking about price parity with ICE cars here.

It's important to note that back in 2009, that cost per kilowatt-hour was a whopping $1,200. The goal for 2012 dropped significantly, to $500, with a future target of $100 to $150/kWh. However, at that time, there was no year listed for when that target might become a reality.

Howell said when the $100/kWh target was established, he had no idea how the industry was going to pull it off. He told the Mobilist:

“... we weren’t sure how we were going to do it. We were scratching our head. ‘Are we really going to be able to get there?’ But we knew you could get close, and that is what you needed to start commercializing this technology.”

However, when Howell was recently asked if he is shocked the industry is already near the goal, he continued:

What do you think?

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“I am surprised. Not that we couldn’t do $100. But the time has been accelerated. You see the acceleration of advances. There is not just market push, but market pull. There is more private investment going in, which helps us focus our resources on the fundamental issues. If you get the problem solved, you know there is a home for this technology. That motivates R & D.”

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