Here’s how long before EVs cost as much as gasoline cars
From the bottom up
Models used for analyzing battery costs are classified either as “top down” or “bottom up.” Top-down models predict cost based primarily on-demand and time. One popular top-down model that canforecast battery costis Wright’s law, which predicts that costs go down as more units are produced. Economies of scale and the experience an industry acquires overtime drive down costs.
Wright’s law is generic. It worksacross all technologies, which makes it possible to predictbattery cost declines based on solar panel cost declines. However, Wright’s law – like other top-down models – doesn’t allow for the analysis of the sources of the cost declines. For that, a bottom-up model is required.
To build a bottom-up cost model, it’s important to understand what goes into making a battery. Lithium-ion batteries consist of a positive electrode, the cathode, a negative electrode, the anode, and an electrolyte, as well as auxiliary components such as terminals and casing.
Each component has a cost associated with its materials, manufacturing, assembly, expenses related to factory maintenance, and overhead costs. For EVs, batteries also need to be integrated into small groups of cells, or modules, which are then combined into packs.
Ouropen-source, bottom-up battery cost modelfollows the same structure as the battery manufacturing process itself. The model uses inputs to the battery manufacturing process as inputs to the model, including battery design specifications, commodity and labor prices, capital investment requirements like manufacturing plants and equipment, overhead rates, and manufacturing volume to account for economies of scale. It uses these inputs to calculate manufacturing costs, material costs, and overhead costs, and those costs are summed to arrive at the final cost.
Cost-cutting opportunities
Using our bottom-up cost model, we can break down the contributions of each part of the battery to the total battery cost and use those insights to analyze the impact of battery innovations on EV cost. Materials make up the largest portion of the total battery cost, around 50%. The cathode accounts for around 43% of the materials cost, and other cell materials account for around 36%.
Improvements in cathode materials are the most important innovations, because the cathode is the largest component of battery cost. This drives a stronginterest in commodity prices.
The most common cathode materials for electric vehicles are nickel cobalt aluminum oxideused in Tesla vehicles, nickel manganese cobalt oxide used inmost other electric vehicles, and lithium iron phosphateused in most electric buses.
Nickel cobalt aluminum oxide has the lowest cost-per-energy-content and highest energy-per-unit-mass, or specific energy, of these three materials. A low cost per unit of energy results from a high specific energy because fewer cells are needed to build a battery pack. This results in a lower cost for other cell materials. Cobalt is the most expensive material within the cathode, so formulations of these materials with less cobalt typically lead to cheaper batteries.
Inactive cell materials such as tabs and containers account for roughly 36% of the total cell materials cost. These other cell materials do not add energy content to the battery. Therefore, reducing inactive materials reduces the weight and size of battery cells without reducing energy content. This drives interest in improving cell design with innovations such astabless batterieslike those being teased by Tesla.
The battery pack cost also decreases significantly with an increase in the number of cells manufacturers produce annually. As more EV battery factoriescome on-line, economies of scale and further improvement in battery manufacturing and design should lead to further cost declines.
Road to price-parity
Predicting a timeline for price parity with ICE vehicles requires forecasting a future trajectory of battery costs. We estimate that reduction in raw material costs, improvements in performance and learning by manufacturing together are likely to lead to batteries with pack costs below $80/kWh by 2025.
Assuming batteries representa quarter of the EV cost, a 100 kWh battery pack at $75 per kilowatt-hour yields a cost of about $30,000. This should result in EV sticker prices that are lower than the sticker prices for comparable models of gas-powered cars.
Abhinav Misalkar contributed to this article while he was a graduate student at Carnegie Mellon University.
This article is republished fromThe ConversationbyVenkat Viswanathan, Associate Professor of Mechanical Engineering,Carnegie Mellon University;Alexander Bills, Ph.D. Candidate in Mechanical Engineering,Carnegie Mellon University, andShashank Sripad, Ph.D. Candidate in Mechanical Engineering,Carnegie Mellon Universityunder a Creative Commons license. Read theoriginal article.
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