Why an electric car battery is so expensive – at least for now

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Last year at Battery Day hosted by Tesla Inc., CEO Elon Musk set an ambitious goal: to produce an electric vehicle at $ 25,000 by 2023. Achieve that sale price – approximately $ 15,000 cheaper than the company’s cheapest model today – is considered essential for delivering a true mass product.

Achieving this requires further savings on technology – especially batteries, which can represent a third of the cost of an electric vehicle – without compromising safety. Alongside Musk, traditional auto-manufacturing giants including Toyota Motor Co. and Volkswagen AG are investing tens of billions of dollars in racing.

1. Why are EV batteries so expensive?

Largely because of what is going on in them. An EV uses the same rechargeable lithium-ion batteries that you find in your laptop or cell phone, they’re just a lot bigger – cells bundled into packs that look like big suitcases – to allow them to provide much more power. energy. The most expensive component in each battery cell is the cathode, one of the two electrodes that store and release electricity. The materials needed for cathodes to pack more energy are often expensive: metals like cobalt, nickel, lithium, and manganese. They must be extracted, processed and converted into high purity chemical compounds.

2. How much are we talking about?

At current prices and pack sizes, the average cost of a battery for a typical EV is about $ 6,300. Battery prices have fallen significantly – 89% over the past decade, according to BloombergNEF. But the industry average price of $ 137 per kilowatt hour (up from about $ 1,191 in 2010) is still above the $ 100 threshold at which the cost should correspond to a car with an internal combustion engine. Costs are not expected to continue to fall so quickly, and rising commodity prices have not helped. Still, lithium-ion packs are on track to drop to $ 92 per kWh by 2024, according to BNEF forecasts, and to $ 58 per kWh by 2030.

3. How will batteries get cheaper?

Manufacturers mainly focus on the more expensive raw materials, and in particular cobalt. One option is to replace the metal with nickel, which is cheaper and contains more energy. However, this requires safety adjustments, as the advantage of cobalt is that it does not overheat and ignite easily. Another move has been to use alternatives that contain no cobalt at all, like low-cost lithium iron phosphate batteries, once ridiculed for poorer performance, but which have seen a revival as design changes. make improvements. Simplifying the design of battery packs and using a standard product for a range of vehicles, rather than one pack tailored to each model, will result in additional savings.

4. What about fire hazards?

Lithium-ion batteries, whether used in network-sized storage facilities, cars, or devices like smartphones, can catch fire if they have been improperly manufactured, damaged in an accident or if the software that runs them has not been designed properly. Incidents remain rare, but come under scrutiny in what remains a developing sector. A decision in August by General Motors Co. to recall $ 1.8 billion of more than 100,000 Chevrolet Bolt models due to battery faults underscored the gravity.

Fires or overheating incidents this year have also impacted large energy storage projects in Australia and California. And fires are not easy to put out; it took firefighters four hours and more than 113,560 liters of water to extinguish a Tesla Model S after a fatal crash in Texas. Tesla insists that incidents involving electric models are receiving undue attention. According to its 2020 Impact Report, cars with internal combustion engines are catching fire at a “vastly” higher rate. From 2012 to 2020, there was about one Tesla fire for every 205 million miles (330 million kilometers) traveled, compared with one fire every 19 million miles for ICE vehicles, the electric vehicle pioneer said.

5. Who are the biggest manufacturers?

Asia dominates the manufacture of lithium-ion cells, accounting for more than 80% of the existing capacity. The Chinese company Contemporary Amperex Technology Co. Ltd. shipped the highest volume in 2020, capturing nearly a quarter of the market. By September of that year, it had extended its lead to 30%, followed by South Korea-based LG Energy Solution and Panasonic Corp. in Japan ; The Tesla and Panasonic joint venture is the largest battery producer in the United States. Emerging producers include Northvolt AB in Sweden, founded by former Tesla executives, and Gotion High-tech Co. in China.

6. Are all batteries the same?

They have the same basic components: two electrodes – a cathode and an anode – and an electrolyte that helps carry charge between them. But there are differences in the materials used, and this is key to the amount of energy they contain. Network storage systems or vehicles traveling short distances can use cheaper, less potent cathode chemistry that combines lithium, iron, and phosphate. For more efficient vehicles, car manufacturers favor more energy-dense materials, such as lithium-nickel-manganese-cobalt oxide or lithium-nickel-cobalt-aluminum oxide. Other improvements aim to improve range – the distance a vehicle can travel before recharging – as well as the speed of recharging.

7. So China is in pole position?

Yes, in almost all aspects. China is responsible for around 80% of the chemical refining that converts lithium, cobalt and other raw materials into battery ingredients, although the metals themselves are largely mined in Australia, the Democratic Republic of the Congo. and Chile. China also dominates processing capacity on four key battery components (cathodes, anodes, electrolytic solutions and separators), with more than half of the capacity commissioned globally for each, according to BNEF data. The nation faces a challenge in advanced semiconductor design and software, components that are increasingly important as cars become smarter. Less than 5% of auto chips are made in China, according to the China Association of Automobile Manufacturers.

here is always a problem with autonomy. While the more expensive EVs can travel 400 miles or more before recharging, consumers considering mainstream models remain concerned about how often they will need to recharge. Automakers and governments have become directly involved in the deployment of public charging infrastructure for drivers on the road. However, most recharging should take place at home, which means another cost to consumers. While the average price of a home charging kit has fallen 18% since 2017 to around $ 650, some high-end two-way chargers (which allow you to send energy from the vehicle to the home or grid ), cost more than $ 6,000. Installation costs in the United States can range from as low as $ 400 to over $ 3,300.

9. What’s around the corner?

The most anticipated is the arrival of solid-state batteries, which promise a huge improvement in performance by replacing flammable liquids that allow charging and discharging with ceramics, glass or polymers. QuantumScape Corp. claims to have innovations in this area to increase a car’s range by up to 50% and the technology could be deployed in vehicles at dealerships as early as 2026.

Another industry goal is to modify anodes – typically made from graphite – to add more silicon, or by using lithium metal. This would probably make the motorization of smaller planes viable. Storing renewable energy with batteries on a large scale for days or weeks, rather than hours now, is also a major challenge. Form Energy Inc. is developing iron-air batteries that it believes could enable completely carbon-free networks. CATL and others are also working on plans to replace lithium or combine it with much cheaper sodium-ion technology for certain niche applications.

– With the help of Chunying Zhang


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