Balancing Act: Range vs. Cost in Next-Gen Electric Cars

By · January 24, 2011

Bill Ford with Electric and Hybrid Cars

Bill Ford, executive chairman, Ford Motor Company, showed off the company's next wave of electric cars at the 2011 Detroit auto show. But will future development focus on increasing electric range or bringing down costs?

The plug-in vehicles rolling out to consumers this year rely on battery technology that’s already a step behind the cutting edge. After all, automakers have been working for years to secure suppliers, build prototypes, refine designs, and integrate systems. When deploying next-generation batteries in future models, automakers face a choice to apply energy density improvements toward increased electric range or reduced costs.

Of course, it’s more of a balancing act than an either-or scenario. A recent survey conducted by IBM’s Institute for Business Value found that U.S. consumers want both more range and lower costs.

For Ford Motor, it’s an open question as to where the optimal balance lies between cost and range. But according to Sherif Marakby, the company’s director of electric vehicle development programs, the answers “will become clear in the next couple of years with more and more EV introductions in the market.” Ford will adjust its plug-in offerings based on results it sees in two areas: First, customer and market acceptance of the current range of electric vehicles. “With several EV introductions, the customer will either tell us the current range is not practical (at any cost), or that cost will determine their next EV, even at current range levels,” he said. The second factor is how battery technology evolves in the next couple years, and especially energy density. Increased energy density drives down cost, said Marakby, and determines “how much battery we can fit in a car.”

According to Kevin See, an analyst with Lux Research who focuses on electric vehicles, cost will be the more important factor for automakers seeking mainstream acceptance of EVs. Although “range anxiety is obviously an issue,” he said, “we absolutely see cost as the major obstacle to mass adoption.”

It’s not a one-size-fits all market, however. “Right now, you can increase range just by building a bigger battery pack,” See said, noting that Coda Automotive has opted for a 40 percent larger pack for its $44,900 Coda Sedan than Nissan has chosen for its Nissan LEAF (33.8 kWh vs. 24 kWh), affording the Coda Electric Sedan up to 120 miles of range compared to about 100 miles for the LEAF.

As a pure-play EV provider, said See, Coda had to differentiate itself. “They can’t come out with the same car as the LEAF,” he said. “They’ve chosen the battery pack to be the differentiator.” See believes that at this stage, however, “a small increase in range is not worth $12,000 to most consumers.” At a certain point, additional range simply may not be worth it for all but a niche market. “Consumers are not expecting to do 300-mile road trips in an electric car,” said See.

Competitive pricing is a moving target, however. As fuel efficiency improves for internal combustion engine vehicles, said See, payback periods (i.e. the time it takes for an EV buyer to recoup the extra upfront cost of their plug-in by spending less on fuel) will increase, unless EV costs also come down. “Going forward, economies of scale for everybody is what’s going to bring down battery cost,” said See, and there’s interest in “tweaking” battery chemistry to further reduce costs. “But the question is, will they come down enough to compete with the internal combustion engine?”

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