If you want to know when electric cars are within reach of everyday car shoppers, keep your eye on the cost of batteries. According to projections from the Department of Energy and others, the tipping point for mainstream adoption of electric vehicles is around $350 per kilowatt-hour. That’s why electric car enthusiasts took notice when the Times of London reported last month that the cost of the 24 kilowatt-hour battery pack in the all-electric Nissan Leaf, due out later this year, is $9,000—or $375 per kilowatt-hour.
Is it time to cue Kool & the Gang and pop open the champagne? Not quite, say a number of experts—including some leading EV advocates.
First, they question how anybody can report a number because the carmakers consider battery cost figures to be top secret. “For the auto companies, it’s the most tightly guarded data. They take their cost information and lock it away in Fort Knox,” said Mark Duvall, director of electric transportation at the Electric Power Research Institute. He was speaking yesterday at Electric Car 2.0, a clean technology conference in San Francisco.
Pinpointing the price is complicated further by the various stages of battery production. “You always have to ask is $375 the cell number or the system number,” Duvall said.
John Gartner, an industry analyst with Pike Research, which has published a number of studies about plug-in electric battery costs, agrees that battery pricing is not an exact science. “Carmakers won’t disclose the installed cost, and it is hard to calculate because
in many cases the manufacturers, such as General Motors, Ford and Nissan, are assembling the packs and designing the battery management software themselves.”
According to Gartner, the installed cost of plug-in vehicle batteries includes not only the battery pack, but also the wiring and configuring of battery packs into a battery array, plus the battery management system that monitors and manages the battery performance. “Cells do not include any management software or hardware, and therefore the cell cost is much lower than the pack or installed price,” Gartner said.
Still, What’s the Number?
Based on his extensive research, Gartner estimates the cost at around $900 today, but expects the price to come down by down by 10 to 15 percent per year, reaching $470 per kWh in 2015. In today’s Wall Street Journal, Pacific Crest analyst Ben Schuman pegged today’s cost at about $1,000 per kWh, but believes that the cost “could get down to $600 to $700 fairly quickly,” and optimistically to $350 in three to five years.
One carmaker willing to share a number is Coda Automotive, a small California-based electric car startup. Dan Mosher, the company’s chief financial officer, also spoke at Electric Car 2.0. “The $375 price might be fiction, but it’s a fact that the costs are coming down quite dramatically. Today, we might still be around $1,000 to $1,200 per kilowatt-hour,” Mosher said. He expects the price to reach $375 per kilowatt-hour in the next five to 10 years.
Mosher cited advantages that Coda might have, because the company manufactures offshore (in China)—but that benefit pales to the advantage enjoyed by major carmakers. Nissan, by virtue of its joint venture with Japan’s NEC Corp., has decades of experience in mass-producing lithium ion batteries. The company is projecting first year global production of the Nissan Leaf at 50,000 units.
“Can somebody really build a vehicle where they pay $375 per kilowatt-hour in 2010, I would say that’s pushing it,” Duvall said. “What they may see is forward pricing and they know their 50,000th or 100,000th vehicle will have that pricing. There’s no physical reason, based on materials and price of production, why that can’t happen.”