Falling Battery Prices Making Electric Vehicles More Mainstream

April 3, 2015 – A new study by the Stockholm Environment Institute appearing in the journal Nature Climate Change traces the cost of lithium-ion battery packs for electric vehicles (EVs) showing an average decline of 14% annually between 2007 and 2014. The net reduction in terms of energy produced is equivalent to a drop from $1,000 U.S. per kilowatt-hour to $410. Industry leading EV manufacturers are besting that $410 average hitting a cost of $300.

As these costs per unit of energy produced decline it is clear that EVs are about to cross a threshold making them more attractive to mainstream purchasers. That threshold the industry has commonly agreed on is below the $300 per kilowatt-hour energy mark. Current lithium-ion battery pack costs are declining at a rate of 8% per year. Researchers predict lithium-ion batteries are on track to reach $230 per kilowatt-hour by 2018, and $167 by 2025. With Tesla building a new gigafactory and Nissan ramping its own large-scale battery production (the image below is of the battery pack in the Nissan Leaf) the 8% rate of price decline versus performance may further accelerate.

EV batteries today can be half the cost of the car. But as the batteries get more powerful two outcomes are foreseen. The first is EVs with current mileage ranges will get far cheaper and become an attractive option for urban drivers. The second is manufacturers will be able to pack more power into EVs to extend their range creating a premium product for both city and extended highway driving. For these premium extended range EVs, capable of achieving up to 480 kilometers (300 miles) in a single drive, the cost of a full charge based on current electricity costs would be less than $10 U.S. That’s far less than a tank of gasoline or diesel even in these oil-price depressed times.

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