Study: Electric Car Battery Costs Declined By 35 Percent From 2014 To 2015

9 months ago by Steven Loveday 49

Tesla's 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.

Production of 2170 battery cells at the Tesla Gigafactory is cited as a contributor to reduced battery costs, even though it is just beginning

Production of 2170 battery cells at the Tesla Gigafactory 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

Tags: , , , , , , , , , , , , , , , , ,

49 responses to "Study: Electric Car Battery Costs Declined By 35 Percent From 2014 To 2015"

  1. Absidu says:

    Elecric cars + autonomous tech + carsharing = you don’t need to own car anymore.

    1. DangerHV says:

      …if you live in an urban area. (u forgot that)

      1. Cavaron says:

        If we are talking like Australian countryside = 1-2 hour drive to the next store – maybe a car is needed (I would choose to fly though). If we are talking European countriside = 10 minutes max. drive to the next store – no car needed.

        1. a-kindred-soul says:

          I live in France and a 20 minutes ride from the closest (very small) store and 55 minutes from the first supermarket…

          1. And I live in the Greater Toronto Area (GTA), and am 1 Km to work, 1.3-1.6 Kms to Grocery, Bank, & Parmacy! 1.3 Kms to a Multiplex Cinema and Mall!

            I also routinely head out about 40 Kms once a week on extended shopping trips and for other purposes.

            However, while I moved here to trim commute costs, I love Road Trips: Ottawa, Detroit, Oshkosh, Virginia, Orlando, Key West,etc, so somewhere in there, I still expect to keep a car.

            1. Kurt says:

              We are in the exact same situation, (Also in Toronto), we road trip to Ottawa, Montreal, and even Halifax.

              We own a Chevrolet VOLT for this precisely this reason. All of our normal driving is electric, our roadtrips are a combo of EV + Gas. Best of both worlds.

    2. John S. says:

      I realized this about two years after we built a house with a 3-car garage…oh well!

      1. speculawyer says:

        Well . . . install a few wireless chargers and start your own autonomous car transit service!

      2. philip d says:

        Close it off and you just gained 600 sq.ft!

    3. Koenigsegg says:

      Sounds like a miserable life not being able to drive

      1. CLIVE says:

        Unless the loser is texting, then I want the car driving for them.

      2. Nick says:

        People still ride horses for fun.

        People will still drive for fun.

        1. Pushmi-Pullyu says:

          Yes, but generally people no longer ride a horse for fun on public roads and streets. Hopefully within a human generation, that will be true of humans driving automobiles too.

          And I dunno about you, but I never considered commuting by car as “fun”. Nor the 8-1/2 hour drive to visit my relatives in western Kansas, either. I’d far rather be able to relax during a car journey, and I suspect the overwhelming majority of people will agree, once their initial fear of giving up control of driving wears off.

          1. Anon says:

            There are a number of Amish communities in the US, that still rely on horses for transport…

        2. Paul Smith says:

          A dude ranch for car drivers…hmmm.

          1. Pushmi-Pullyu says:

            That’s called a “racetrack”.

    4. John says:

      I want to own a car. I couldn’t care less about car sharing.

      1. Paul Smith says:

        I’ve always wanted a monkey.

        1. You could build a Monkey Zoo, attached to your house!

          1. William says:

            Or, you could just go Free Range Monkey, without all the Zoo Bars and Owned Cars!

    5. Priusmaniac says:

      Having hotels around doesn’t mean people don’t own houses anymore. So it doesn’t make more sense to say people won’t own cars anymore. Beside you don’t need self driving to go electric.

      1. Gasbag says:

        @pupu
        The hotels/home ownership analogy doesn’t work. Cost and convenience are just the opposite.

        1. Pushmi-Pullyu says:

          Hmmm? You’re replying to Priusmaniac, not me. But I agree with him. Using a taxi, whether or not it has a driver, is far more expensive per trip than owning a car, just like staying in a decent hotel is typically far more expensive per night than single-family home ownership. Well, at least the cost of home ownership where I live. Maybe not where you live, if real estate is extremely expensive there.

        2. no comment says:

          the better analogy would be to say that rental apartments make home ownership obsolete. of course, that analogy is wrong also.

    6. Ocean Railroader says:

      The reality is I’m not going to use this car sharing services unless I get off a plane in some other city.

      I for one I’m not thrilled about the idea of sharing a car with dozens of other strangers.

      The reality is I think car sharing is not going to take as many cars away off the roads as is hyped about by these companies.

      1. Pushmi-Pullyu says:

        Yeah, I think it’s mostly wishful thinking. They’re also ignoring the fact that fully autonomous cars will actually add some cars to the road, owned by the elderly, the disabled, and others who are physically unable to drive.

        Lower insurance rates on autonomous cars will also enable some of the younger generation, those who are now too poor to afford a car, to then afford one. So that’s another reason autonomous cars will likely mean more cars on the road, and not less.

        As many have noted, including myself, autonomous ride share services will mainly cover only those areas already well serviced by taxis.

  2. ClarksonCote says:

    “EV sales was around 290,000, and by the end of 2015, sales rocketed to about 462,000”

    These numbers don’t match InsideEV’s numbers, and I suspect IEV’s is more accurate. Where do their numbers come from?

    1. Jay Cole says:

      Who knows, lol. I had a quick look at their data for 2015…and it seems they are about ~15-20k light in Europe, NA looks looks good (~122k), China is ~25k light (not sure if they only counted domestic builds and not imports or missed some brands), and they are missing some regional/obscure data sources of some significance that aren’t super huge in and of themselves, but can add up when combined (like Hong Kong, Sri Lanka, etc).

      For our side of things, we physically get the country-by-country reports, individual model reports, etc. then tally them all up. So our “worldwide” number actually represents the low end of the actual number (because one would have to have a lot of hubris to think every sale could be recorded and tallied accurately…and why we drop the *-asterisk on it).

      Not that it is a huge deal, it understates the net, but it still shows the same basic growth/trends. I will say, attempting to keep up on EV registrations is a huge pain in the patoot, so we don’t begrudge them a 10-15% margin of error at all.

  3. tosho says:

    “OPEC predicts 1.7 million electric cars on global roads by 2020” – if we count all cars with a plug, we are already at 2 million.

    1. For example, the 53 miles / ~85 Kms of range in a 2017 Volt, would cover all my normal Daily Drives, my usual Weekend Drives, and my Quarterly or so 4 Hour Drives would have at least the first Hour on Electric.

      It could so be used for Road Trips, with some of the miles on Electric, depending on food and sleep stops having charging.

      However, I find the roofline lower and back seats tighter in headroom than my 1993 Chevy Sprint 4 Door Hatch! (That I used to have, and bought new.)

      I think the Malibu Hybrid, when it progresses to become a plug in, may well increase their PHEV / EREV sales a lot!

    2. Oleg Dontsov says:

      OPEC predicts 1.7 million electric cars on global roads by 2020:

      yes, we are already 2077000 for 31.12.2016

  4. Ron Morrell says:

    In other news, the replacement price for a replacement battery pack for a `11 Nissan Leave is holding steady at $5500 + 1000 core fee. Another reason why my Leave 2.0 will be made by Chevrolet.

    1. William says:

      Is that a Nissan “Leave” your trading in for the Long Range and Low Price leader, GM Bolt – (ing from a Lack Luster Leaf) ?

      Hey Wally, “Leave” it to Bolt-Fever!

      1. jimjonjack&jill says:

        Hey Wally ., Eat a Beaver Save a Tree…l o l…

  5. Kevin C. says:

    All right. I will heedlessly submit to the willful suspension of disbelief.
    A 35% reduction in price over one year, ok.
    This should mean that all those early and thoroughly thrashed Leaves will someday get a second chance at life. A new battery in an old Leaf skin, to paraphrase an older text.

    Are there any numbers for people who have purchased new Leaf batteries? Has it even happened out of warranty?

    1. Reddy says:

      Yes, and Nissan is STILL sticking to their ridiculous prices $5500+installation+$1000 core return

      1. It might not seem so ridiculous if you priced individual LiFePO4 Cells, to build an EV Conversion, since it is already built as a replacement pack, fits a prepared space, and has BMS wiring onboard, just needing connection!

        See http://www.evassemble.com for a look, and figure out (Volts at 3.2 per cell, time Ah, to get Wh x 1,000) what 24 kWh would cost you! Even 16 kWh – what 2/3rds of a Leaf pack, new, might still have, when you change it out (and consider it dead)!

      2. GSP says:

        $5500 is only $230/kWh. That is very reasonable for dealer MSRP of an automotive part. It could be below Nissan’s cost, with no markup to pay for inventory, distribution, and dealer margin.

        Nissan does need a longer life battery (10-15 years), which probably requires a cooling system for today’s Li-ion chemistries.

        GSP

  6. heisenberghtbacktotheroots says:

    slightly off topic, but surely interesting:

    http://spectrum.ieee.org/cars-that-think/transportation/sensors/velodyne-to-build-lidar-megafactory

    Prices are dropping for batteries, prices are dropping for lidars… Well prices are dropping for everything…

    Pushy will be happy, when finally Tesla adds Lidar… at around 50 bucks there is no way it wont be added…

    1. But he might also ask for wrap around Lidars, a second NVIDIA computer, and an areal Drone for full 360 degree coverage and further look ahead communication to the car!
      /s

  7. Pushmi-Pullyu says:

    I think the claims in this article have more to do with cherry-picking of data than the actual decline in average battery price. Sure, if you take the oft-cited figure of $145/kWh that LG Chem is charging GM for Bolt batteries, and compare that to the average per-kWh battery price in 2014, then you come up with a pretty startling decline in just one year.

    But it has been widely speculated that LG Chem gave GM a “sweetheart deal” on battery price, in exchange for GM contracting with LG Electronics to build the entire EV powertrain for the Bolt. Given LG Chem’s angry reaction to the accidental public revelation of that figure, and LG’s statement that the price is far below what they’re charging other customers, I presume there is at least some truth to that speculation.

    Or to put it more succinctly: $145/kWh is almost certainly considerably below the average price which EV makers are now paying for batteries.

    And whatever figure the study used for the price of Gigafactory batteries, it can only have been an estimate. Tesla has not revealed the actual cost of Gf batteries. They may someday cite a per-kWh battery cell price for certain applications, such as their Powerwall and Powerpack units, but it’s not very believable that Tesla will ever tell us the actual cost. As with LG Chem and other battery makers, that info is considered a trade secret.

    * * * * *

    @heisenberghtbacktotheroots:

    Thank you! Yes, that would make me happy. 🙂

    1. DonC says:

      That’s a good summary. Sort of like stock returns — cherry picking the dates can make a big difference in the numbers but aren’t of any practical significance.

      1. Maybe a bit like day traders telling how much they make per day, without stating how many $ they put in for each trade, and how many trades it took them to do a day to make that $ figure!

    2. Jake Brake says:

      Im guessing Tesla will be around $90/kwh at the cell level for 21700s.

      1. Loboc says:

        You can get retail laptop battery cells for $90/kWh.

    3. ItsNotAboutTheMoney says:

      Small correction: the quoted LG price was specifically for _cells_, not the final battery.

      While there’s a suspicion of it being offset by the other components, and helping LG develop its automotive division, the price could in part or whole have been possible with a bit of management accounting: use the current spare capacity at cost for competitive advantage, with the knowledge that any capacity expansion will take advantage of new developments and be able to match the given price.

    4. GSP says:

      It should be pointed out that $145/kWh is the price of the LG Chem cells,and GM does not even buy cells for the Bolt EV from LG Chem. Instead GM buys the complete battery pack from LG, and battery pack pricing was not disclosed. LG’s battery pack pricing to GM could be high enough to make up for the cell price.

      Cells are typically about 60% of the cost of an automotive battery pack, but could be even lower for the GM- LG Chem supply contract.

      GSP

  8. Mister G says:

    An additional 20% decline will be awesome for this model 3 reservation holder.

  9. 3rd EV start up says:

    Remove the $145 kwH aland what is the $/kwH at now? Thanks!