Lithium-Ion Cell Prices Poised for Big Plunge

By · November 04, 2013

Tesla Model S

The Model S, this one snapped in upscale Westport, Connecticut last week, is becoming dominant in America's wealthiest zipcodes. (Jim Motavalli photo)

It’s nice to hear optimism in the electric car space. While it’s hardly likely that President Obama’s dream of a million EVs on the road by 2015 will be realized, low lithium-ion battery prices by then (and even lower ones by 2020) will spur a growth spurt in the plug-in market, said Sam Jaffe, a senior research analyst at Navigant Research.

Jaffe is leading a Navigant webinar on “The Lithium-Ion Inflection Point” Tuesday afternoon. Global demand, the company said, “is set to explode.” While the word choice might not be ideal following the two Tesla fires, it’s evocative anyway. The main reasons? Improvements in the cost of the chemistry, energy density, performance and safety, plus big economies of scale.

How About $180 per KwH?

Jaffe said Monday he expects to see large-format lithium-ion cell prices drop from $500 a kilowatt hour now to $300 by 2015 and a dramatically low $180 by 2020. “I feel very confident about those number,” he said. “They’re the result of a lot of back and forth with manufacturers, and they say the reason they picked li-ion in the first place is that it had the potential to reach those kinds of numbers. The price drops have already started—we’re seeing costs come down for many of the components of the battery, including the metal, wiring and plastic.”

Battery Markets

Battery markets will grow internationally, Navigant said. (Navigant Research graphic)

Yes, there are other technologies out there, including high-density solid-state batteries from company’s like Michigan’s Sakti3. But according to Jaffe, “Solid electrolyte chemistry is very interesting, but it’s in the early research stages—nobody’s on the brink of bringing it to production. We expect li-ion to be with us through 2020, and probably much longer.”

Game-Changing Cheap Batteries

One reason price plunges will start to accelerate, Jaffe said, is that newer large-format li-ion batteries use very small or no amount of high-priced cobalt in their chemistry.

Cheap batteries are a game changer for the auto industry, and Navigant sees big market leaps—from half a percent of U.S. sales today to three to five percent by 2020. “Right now, a Chevy Volt still doesn’t make sense for many buyers when you can get a comparable gas car for $10,000 less,” he said. “But when there’s a $2,000 to $4,000 difference, which is what we expect by 202, then its’ not quite a no-brainer to buy the electric, but it’s hard not to.”

A Big Market, Even at 3 Percent

Is a three to five percent market share reason to cheer? Jaffe thinks so. “If you look at other new vehicle types, like the hybrid in the late 90s or the SUV in the late 80s, they were in a similar position. It takes time for a new type of vehicle to get traction in the car market. And three percent of the auto market is a huge business in and of itself.”

That’s true. Even with Tesla’s numbers now, the industry is getting interested. Especially since the Model S is outselling many other luxury leaders, and has become the top-selling car in some very impressive zip codes.

Comments

· · 47 weeks ago

"Right now, a Chevy Volt still doesn’t make sense for many buyers when you can get a comparable gas car for $10,000 less,”

That is why government is offering $7,500 to counter that battery premium.

So, after $7,500 tax incentives, the difference is only $2,500 and that can be saved within 3-4 years in gas cost alone....

If you include the CA state incentive of $1,500. That is only $1K difference and I saved that much gas in the first year alone....

NO brainer.

Sure, in order for the plugin car to hold the market on their own, the price of battery will have to come down. But once it does, buying those plugin car will become a no brainer....

· · 47 weeks ago

If he is right then BEVs and PHEVs will keep increasing in sales while pure ICE sales begin to drop as gas price continue going up.

· · 47 weeks ago

At $180/kWh a battery backup system that charged off peak and was used during peak would be paid for in just under 7 years (using Portland Oregon rates) at 2020 estimated battery costs. That is not a green solution, as overall more electricity would be used. If somebody is considering a solar PV system, it could sway them to go the battery backup route.

Just a thought.

· · 47 weeks ago

So that "big plunge" will follow the 7%/year decline already observed and previously predicted.
And somehow, EVs and plug-ins will benefit from seeing the price of their most expensive component decrease. Pretty believable I'd say...

· · 47 weeks ago

This could have a huge impact. I wasn't sure if I'd replace my battery pack or scrap the car in 7-8 years, but if I could replace the batteries for under $4k ($180/kWh x 16kWh = $2880) and the car's otherwise holding up (there's no gas engine and I live in the high desert where cars don't die with even moderate care - I still see Hornets and Mavericks), why not?

We got into this knowing the risks of things going sideways and that we could afford to take the hit, but pretty sure the downsides were being exaggerated, so a lot of BEV owners are going to be feeling awfully smug if this is the way things play out.

· · 47 weeks ago

Today's lithium ion batteries are about to go through a transition we just witnessed with solar PV these past few years. There are, for instance, solar panel technologies that are being developed today that are mind boggling. But they are still a few years out and the commercial market will continue to grow with today's technology, which will witness incremental performance improvements in addition to a fairly dramatic drop in prices when compared to today.

When (certainly more so than if) solid electrolyte batteries get here, they will be amazing. Sakti3 is certainly one of the companies to keep an eye on.

· · 47 weeks ago

This could actually be bad news - at least for the near term - for the EV industry. The analogy is the personal computer market. After you have one, upgrades are usually postponed beyond when you just WANT the latest and greatest to when you can at least make an argument to yourself that you NEED it.

SOMEBODY is going to have to take that loss resulting from declining battery costs. Signing onto even a PACE-type loan that locks the buyer into the financial liability for it has just lost some of its appeal. It looks like what might be required to sustain near-term EV sales is some kind of battery lease arrangement that is both affordable and doesn't penalize lessee for early termination.

· · 46 weeks ago

IIRC, the patents on NiMH are to expire on/before Jan 2015, so large format generic NiMH batteries should be, at long last, available for automotive use. This competition will force a price reduction in Li ion. IIRC, there were also predictions of newer NiMH batteries w/more power.

Then there's Envia, Wash. State U.'s Sn anode Li ion tech, and Northwestern's Si-graphene composite anode.

Hopefully, some of these will pan out, unlike Eestor....

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