Op-Ed: Cheaper Batteries – Not Better Batteries – Will Rule The EV Market


Panasonic Energy President Naoto Noguchi Gives Tesla CTO JB Straubel On Of The First 18650 Lithium-ion Cells At Panasonic's Suminoe Factory In April Of 2010

Panasonic Energy President Naoto Noguchi Gives Tesla CTO JB Straubel On Of The First 18650 Lithium-ion Cells At Panasonic’s Suminoe Factory In April Of 2010

In December 2009, Panasonic announced they had developed a 4.0Ah silicon anode battery that would go into production before the end of March 2013.  At the end of 2013 the battery is nowhere to be found.

It’s easy to chalk this up to product development delays. I don’t doubt this is hard work – science is hard. If it were easy we’d have fusion and flying cars by now.

LG Chem Has Put A Lot Of Effort Into Making Existing Technology Cheaper Of Late

LG Chem Has Put A Lot Of Effort Into Making Existing Technology Cheaper Of Late

Rather, I think that for large battery manufacturers like Panasonic and LG, they’ve redeployed resources from making better batteries at the same price, to making their existing batteries cost less.

Reducing the cost per kWh of battery capacity is now job one. The disruptive threat from some start-up coming out with a novel process to make a 4x energy capacity battery is mitigated by the fact that the large mainstream suppliers will be able to undercut them on both price and manufacturing capacity.

Their novel process might work for niche applications in low volumes, but it won’t matter much because the cells will, by comparison, be in short supply and too expensive for a mainstream EV.

The change in priorities wouldn’t be a surprising one, given the principle issue with EVs today – cost. If you don’t bring down the cost of the battery packs in the EVs today, there won’t be broad-based demand for EVs tomorrow no matter what the range of the vehicle is.

Bring Costs Down

Making Their EVs More Affordable Has Been A Priority Of Both Nissan And General Motors

When EVs take the place of a second or third car in a household, the range issue isn’t nearly the problem it is made out to be. And the market for second and third cars in households that can afford suburban homes to recharge them in is sufficiently large this early in the electric vehicle adoption curve.

Battery costs are not generally published, but we can estimate that as of mid 2013 are around $350 per kWh at the finished pack level. This makes the price around $30,000 for the Tesla 85kWh battery, $5,800 for the Volt, and $8,500 for the Nissan Leaf pack.

By the end of 2015, prices could be around $250 per kWh, and $150 per kWh by the end of 2017. At the second long term price goal of $150, it becomes possible to sell a 60 kWh/220 mile range EV for $35,000 because the pack is only $9,000 (or 30% of the bill of materials), roughly in line with the Nissan Leaf.

Tesla Has Shown A Purpose Built Electric Vehicle Has Little Issue Absorbing Today's Large Battery Packs

Tesla Has Shown A Purpose Built Electric Vehicle Has Little Issue Absorbing Today’s Large Battery Packs

As Tesla has shown, a purpose-built EV can accommodate the amount of cells necessary for this battery pack size. Existing battery technologies (NMC, LiFePO4) will continue to improve marginally each year, providing more cells per unit volume and per unit weight.

Once the price issue is resolved, battery makers can focus exclusively on incorporating new technologies to make EV range no longer an issue without spiking the price. While emerging technologies like lithium-air technologies may become practical after 2020, when the cost can come down enough to put them in affordable EVs for the driving public is the larger question.

Categories: Battery Tech


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44 Comments on "Op-Ed: Cheaper Batteries – Not Better Batteries – Will Rule The EV Market"

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George Bower

Great article Anthony. I agree. I had built a spread sheet on batteries in 2010 that had all the improved Tesla batteries on it. I had the 2.6, 2.9, and 3.1 ahr batts on there. AFIK they have only 2.9’s in the current Model S. Is this the battery ??:http://industrial.panasonic.com/www-data/pdf2/ACA4000/ACA4000CE240.pdf

Sounds like you are pretty up to date on these battery issues.

I keep hearing people say that: “there is not much room to bring down costs on current tech batteries because 70% of the battery costs are in raw materials”.

Do you agree with that statement?


Raw materials for cells are not that expensive. Most of the material cost is for processing the raw materials to make finished materials for the cell manufacturers to use.


George Bower

sounds like you are agreeing then. There isn’t that much more cost reduction that can be done on todays batteries. We hit the floor at about 300$/kwh on a cell basis.


No, we’re not near the floor yet. Raw materials and energy are probably 1/10th of that. For example, Nissan stated they use 4kg of lithium per 24 kWh pack, which works out to maybe $5/kWh.

It’s equipment and chemicals for production that bring the cost up. Volume will bring those down drastically, especially with automation advancing so rapidly.

Dan Frederiksen

George, we are below 200 already.


The contribution of raw materials depends on the chemistry. LMO is cheap, really cheap, that’s probably one of the main reason that Nissan chose that as well as being ‘adequate’ in other ways. Current cost is going to be mainly amortization, once that’s all out of the way we should see an EV like a Leaf being the same or cheaper than an equivalent ICE. Combine that with the amazingly low running costs and we *should* see massive uptake.

Lou Grinzo

Strongly agree.

While I would love to see someone concoct a battery that gives my Leaf 4X the range at 1/4 the cost, or some other drool-inducing set of specs, simply lowering the price will be enough to get us to the tipping point for mainstream EV acceptance. IMO, we’re very close now, and we’re likely get much closer when the Leaf 2.0 comes out (2015 model?) and other models in the pipeline.

We could very easily go from EVs selling 2K units/month for some models to sales of 5 or 10 times that and waiting lists because the car companies can’t get or build battery packs quickly enough.

Once the price improves a little more, and more consumers figure out how great EVs are, we’ve set the stage for one heck of a market tipping point.


You aren’t going to improve on the big cell makers production costs, for those cylindrical cells, by much. They are incredibly automated, and fast. Higher energy density is the only way.

What Tesla has shown is that it takes a 5000 pound car to have what most consider acceptable range with current energy density. And at that weight efficiency suffers. Just going from the 60 kWh pack to the 85 kWh pack cost them 8.5% efficiency!

George Bower

so you think 300$/kwh is about as cheap as we can get these cells down too?


I think the price per cell will stay about the same. But the energy per cell will go up.


…so, cost for a given total capacity goes down.

Maybe I just don’t get the gist of this article: what matters isn’t much price per cell, it’s price for a given amount of energy, at some specified conditions like a minimum number of cycles.

So to make batteries more affordable, ever reduce price/cell (cheaper batteries), or increase capacity/cell at the same price (better batteries), or any combination of the two. It’s not one vs the other…


Efficiency vs. weight is well studied, and there’s no way in hell that the 8.5% is due to the 60 kWh carrying a mere 30% fewer batteries.

Remember how huge vampire losses were in the Model S that made little sense? That’s just one example of the hidden processes going on inside the car, so by no means are all other variables held constant in the 60kWh vs 85kWh EPA test.


You are looking at a difference of 25 kWh, probably 500 pounds of finished pack weight, about 10% of the weight of the car. So rolling resistance goes up by ~10%, and every time you accelerate or climb that extra weight takes a bit out of miles per kilowatt too.

Battery weight is a huge deal. Going from a 10 gallon gas tank to a 20 gallon tank will double your ICE range at a weight penalty of ~70 pounds counting the gas and the bigger tank. That will be lost in the measurement error on a car.


25kWh is 500 lbs? Give me a break. They use the same steel protection and much of the internals are the same as well.
The difference is 183 lbs, which is less than 5%.

With low resistance tires and regenerative braking, a 5% reduction in weight will give you less than 2% better efficiency on the highway. The difference in the Model S highway ratings is 8%. There are other factors here.


If you make a 4X battery that cost 3X to make……you are still cheaper and lighter.


You are right for long range pure EVs, but not necessarily for EREVs/PHEVs.

For the latter, the key metric is amortized cost per cycle. If you can build a battery pack that you are confident (i.e. are willing to guarantee) will last 10,000 cycles/20 years, you can sell them for $500/kWh, or lease them for $40 per kWh per yr, and you’ll provide better value than $200/kWh cells that last 500 cycles, and also better value than gasoline.


A123 cells have been cycled 8000+ times with 80% capacity remaining. But the only production car using them is the Spark EV. I wish they would sell that model in other states.

Mark Hovis

Great article Anthony. I have visited your blog to see that you have a interest in what the current chemistries are doing. I hope Jay twists your arm for future battery posts!

David Murray

Another consideration about the lower price of batteries. A Plug-in Prius uses a 4.4 Kwh battery pack. So at $350 per Kwh, that means the pack should cost around $1,500. That is an interesting figure because that’s what the NiMh battery in the standard Prius costs, or at least used to cost at one point. Which goes back to something I’ve been saying for a while. At some point the only added cost to produce a plug-in hybrid instead of a standard hybrid would be the cost of the charger. I hope to see regular hybrids die off in favor of plug-ins.


Indeed. With the tax credit, regular hybrids should be replaced with plugins already.

Electric Car Insider

I’d love to see a 20 year battery, but I don’t think that’s the automotive target, and there’s a rational case to be made other than planned obsolesence.

In ten years, it’s very likely we’ll have 4x energy density at lower cost. The pathway is there.

So overpaying today is not the most cost effective solution, even if you plan to keep your car for 20 years.


A 20-year battery would enable some interesting financing in the industry.

Imagine guaranteeing a 30kWh battery pack for life, and charging 6c/mile (equivalent of 50mpg & $3/gal, i.e. a no-brainer). If the car lasts 200,000 miles, it’ll bring in $12,000 of revenue. So knock off $6k from the sticker price with this financing method, maybe spend $1k on a refurbishment down the road, and you’ve got healthy profit.

We’re not going to replace all gasoline cars in 20 years, so there will definitely be demand for a 6c/mile car down the road.


FYI, your 6c/mile completely ignores the cost of electricity. Around me, that adds another 3c/mile, making it more like a 33MPG car at $3/gal. Still not terrible, but suddenly more expensive than a prius (today anyway)


So…you project that the 24 kWh battery in a Leaf will be $2400 cheaper in 2015, and that there isn’t much chance of a larger capacity in the same volume by then. This sounds to me like an argument to buy (not lease) now (not later). While I’m sure there will be other minor improvements in the cars themselves from year to year (as has been the case for the past few years), I’m looking forward to replacing my current EV when the battery tech actually advances in a considerable way.


I completely agree; in fact, I bought my Leaf. 🙂

I might add, depending what form those battery improvements take, one will likely not need to replace the whole car to enjoy them. Even if, say, Nissan doesn’t provide an upgraded pack for 1st-gen Leafs, given the number on the road now, I’m sure some 3rd parties will.

For the cost of leasing an EV around 8 years, one can not only BUY the vehicle, but also a rebuilt battery pack. At that point the car will look 8 years old, sure, but its drivetrain will be better than new, ready for another 6 to 10 years — for free.

I trust that some people would rather pay more to get “the latest”, just like some upgrade their cellphone every year even though their existing device did fit their needs just fine.
Personally I bought an EV to minimize both my expenses and environmental footprint. I’m going to make it last.


Production or science, another big problem is the public perception that Moore’s law applies, and people wait for lithium-air like its the ipad air.

Nice piece.

Bill Howland

Its fun to dream here… My Roadster with a 3X capacity would be able to go 720 miles before refuelling. A volt would go 100 miles before needing to switch to the engine.

Suddenly, people who didn’t consider the 60 mile (practical limit) of the Leaf would consider 180 miles much more reasonable and would purchase one.


Wouldn’t that drop the used car price of the existing BEVs significantly? =)

Randy Bryan

Good article and discussion. However, to reflect the message of a recent car commercial; Its not cost improvement OR density improvement [neither cheaper batts without better range or any more range without price improvement will succeed for long], AND is better.

Leonard Janus

Cheaper batteries, cheaper EV…. a disaster for petrol companies!
Also who will make all the electricity needed for EV? With OIL?
Move slowly, please.

Mark Hovis

Anthony, we should respond to this. It fits into this article some but speaks more to hype.