Tuesday, January 24, 2012

EV Battery Price Plummeting: The Shock EVs Need

For electric vehicles to go mainstream, the price of their car batteries must plummet.  The good news for EV enthusiasts is that they are. 

Battery prices have already sharply declined from up to $1,200 per watt in 2008 to $600 now, according to Secretary Chu in comments he made at the Detroit Auto Show.  Chu predicted further big declines ahead.  See http://www.green.autoblog.com/.

An electric car battery cost about $12,000 in 2008.  But a battery that can power a car on electricity for 40 miles is expected to be $3,600 in 2015 and $1,500 in 2020.  Those cost reductions would shave $8,400 to $10,500 off the price of an electric car and would make electric cars cost competitive with gasoline vehicles.

No doubt sales of electric vehicles will depend substantially on whether the battery costs do fall to $3,600 by 2015 and whether gasoline costs go above $4 per gallon.  Pike Research predicts annual sales of electric vehicles, including plug-in hybrids of 300,000 in 2015, while Michigan's Center for Automotive Research (MCAR) is more bearish, projecting sales of 140,00 in 2015. Pike's sales numbers amount to about 2% of all cars sold and MCAR's to about 1%.

The possible range of outcomes for electric vehicle sales is wide and uncertain.  Yet, certainly prices of batteries and gasoline will tell the tale.

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