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Published on December 27th, 2013 | by Guest Contributor

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Mindboggling Consequences In Wake Of Battery Price Drops

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December 27th, 2013 by
 

Originally published by ABB-Conversations
by Hans Streng

We are now in a transition period where battery prices are dropping by 20-30% each year. The consequences for the automotive industry are mindboggling

ABB_EV_Charging1

About a century ago the nascent automotive industry started out by producing electric vehicles. Even big names such as Porsche started their business on a pure-electric basis. In the hundred-year hiccup that followed we have burned billions of tons of fossil fuel, but the clean times of pure electric are returning.

The trigger to this all is simple: affordable batteries. Just as the television business was turned upside-down by the prices of flat-panel TVs in the 90’s and similarly the solar business by plummeting panel prices in the decade thereafter, we are now in a transition period where battery prices are dropping by 20-30% each year. The consequences for the automotive industry are mindboggling.

Battery prices are the main cost drivers of electric vehicles. Last year Volkswagen stated that it would be possible to manufacture a 100% electric vehicle more cheaply than a car with a combustion engine within three years.

Three years ago it was a challenge to produce an electric vehicle with a 300km range for an affordable price. Well, we have seen what happened to the stock price of Tesla Motors after the successful introduction of the Tesla-S – a 300-km range electric vehicle, which is outselling Porsche and Audi in California at the moment.

In China there is an additional market driver: megacity air pollution. The large metropolitan areas are turning into smog centers and the Chinese government has decided to invest massively and switch quickly to e-mobility. The result is the establishment of tens of new companies to produce e-bikes, e-cars, e-buses and batteries.

With the arrival of long-range affordable electric vehicles the challenges to the charging infrastructure increase proportionally. Charging power must go up, both at home and in public charging stations.

Over the last 5 years the e-mobility industry has converged around three global fast charge standards. Europe/USA have selected the ‘’Combo’’ standard, China has selected the ‘’GB/T’’ standard and Japan has selected the ‘’Chademo’’ standard. The selection of standards is the result of a five year political and strategic dance among governments and automotive players, but the dust has settled and the markets can begin to takeoff.

ABB is contributing to this critical stage in the market with its Terra 53 charging platform, the world’s first to meet all DC fast-charging standards. With its multi-standard architecture and near-term option to cascade the stations to higher power, the Terra 53 is ideal for highway and city centers, fueling stations, fleets, and other infrastructure investors who are interested in the growing EV charging market. In addition to that, ABB is launching high-power DC home chargers to enable overnight charging of large-battery vehicles, which would otherwise take a weekend or two to charge from an ordinary home-socket – times are changing.

National networks such as the one announced by the Netherlands this past summer will bring fast charging stations to within 50 km of all of the country’s 16.7 million people. To put that into perspective, 16.7 million people is about the size of Shenzhen, and that’s only one Chinese city…

The automotive industry has to switch, and switch quickly. Batteries will do to the automotive industry what flat panels did to TV and PV-panels to the solar business.

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  • Jeff Spies

    I always cringe when I see fundamentally flawed statements about prices like in this article. It really diminishes the credibility of the author and his company to make such rediculously inaccurate statements. 20-30% per year price declines are far from the more realistic 7-10% levels that other commenters have noted, but the interesting missing component is these price reductions are only for lithium based batteries. Lead acid batteries which are 2-4 times less expensive than lithium are still the mainstay for offgrid applications. They are NOT going down in price as their cost reductions were driven many years ago by the automotive industry. The magic low-cost long-life battery for offgrid homes has not been invented yet. I would say we are at least 5-10 years away. I hope I am wrong, but I don’t think I am.

  • Others

    http://www.batterypoweronline.com/main/articles/the-lithium-ion-inflection-point/

    Looks like the current battery price is $500/kwh and we can prove it based on the cost of Electric Vehicle like Volt.

    But now the Mitsubishi Miev is priced @ $22,000 so they should have procured the battery at sub $500 / kwh price range.

  • abhi

    Now you have the right spelling! Mind bogggling!!

  • http://electrobatics.wordpress.com/ arne-nl

    About Fastned… They are indeed using Terra 53 charging stations and have just opened their first 4 locations. Without Zoe-compatible 43 kW AC fast charge. Bummer :( .

    Apparently the right cables are unavailable and the chargers are limited to 22 kW for now. According to the rumours, this should be corrected soon, start of 2014. Let’s hope that happens soon. Other charging providers (eg The New Motion) seem to run into other problems trying to offer us Zoe-drivers fast charging options.

    The Renault Zoe has been delivered to customers in the Netherlands since May and there are now 0 fast chargers in operation. Renault seems to be utterly indifferent. I recently read that Zoe sales fell far short of their own projections. Whoever can put 1 and 1 together…

    Like I wrote in another comment: dinosaur thinking. They’re in the business of pushing tin, not giving their customers a complete, workable solution. They are sooooo lucky I really want to drive an EV. And of course the Zoe’s Cameleon charger kicks ass.

  • SecularAnimist

    jburt56 wrote: “Plus the EV buildout reduces the price for residential batteries to store solar energy.”

    This is VERY important, possibly in the long run a more important result of the plummeting cost of batteries driven by EV battery R&D than the proliferation of affordable EVs themselves. Think about what it means when every house on the grid has a battery the size of a small refrigerator than can store a day or two worth of electricity.

    • Bob_Wallace

      I’m not sure people are going to use their EV batteries for routine storage. EV batteries will likely be much more expensive than the batteries used for grid storage.

      EVs as emergency backup – that I can see. Bet a lot of people back east wish they had a Volt right now.

      • JamesWimberley

        jburt56 wasn’t talking about the use of batteries *in cars* for household storage, which is limited by daily timing cycles. His point, surely correct, was that progress in batteries funded by the automotive supply chain spills over into a parallel reduction in the cost of dedicated residential systems.

        • Omega Centauri

          Or if material limits are reached (Lithium isn’t terribly abundant), the demand could end up raising the rpices, as the different applications bid against each other for a limited resource.

          Just a few years ago, we didn’t think there was enough Lithium for an EV buildout. Now we are in the early stages of an EV plus grid storage buildout. I haven’t heard much about Lithium supply lately. Is it likley to hold out? Or will we have to rely of battery chemistries that don’t use Lithium.

          • Bob_Wallace

            At 20 mg lithium per kg of Earth’s crust, lithium is the 25th most abundant element. Nickel and lead have about the same abundance. There are approximately 39 million tonnes of accessible lithium in the Earth’s crust.
            There are approximately 230,000,000,000 tons of lithium in seawater.

          • Omega Centauri

            39 million tons, with 7 billion people thats only 5.5KG per capita. And we see this going towards grid level storage, not just for cars. There may be scalability limits that we will hit.

          • Bob_Wallace

            Not every person will have a car.

            It’s not likely that lithium will see a lot of use in grid storage. There are cheaper alternatives – with grid storage weight/size is not a controlling factor as it is with EVs.

            Then there’s that 230,000,000,000 tons in the ocean. It’s extractable at an affordable cost.

          • doug card

            5.5 Kg yields about 60 kWh or about the same as a volt. So we could make 7 Billion Volts. I would expect they will have a better ratio than 11.7 kwh per kg within a few years.

          • Omega Centauri

            Roughly 1 vehicle per person. We need to replace stuff like trucks buses, construction equipment also, not just personal/family motorcars. So aauming the global poor gets out of poverty, the potential Li battery capacity is of the same order of magnitude as the need. But what if the resource estimate is ten times too high? (Or too small).
            Currently Li-ion seems to be a popular choice for early grid storage as well, that may have to change.

          • Bob_Wallace

            I would expect far less than one car per person.

            Cars are a pain to own in a dense city. Parking is expensive/difficult.
            Once we get to self-driving EVs there will be no need to own a car if you live in a city. There will always be a car a minute or two away from your front door, just push a button on your smart phone and the car will be at the sidewalk before you are.

            When you get to where you’re going just get out. No need to hunt for a place to park and walk from there to where you wanted to go.

            Between that and better public transportation the need for cars should be far lower than 1 per person.

            Even people living in suburbia may find it easy to get by with fewer cars. A self-driving car pool van may be very attractive to many. Or a self-driving taxi to the light rail system.

            The nice thing about self-driving taxis is that you could take public transportation or your bike to where you are going and then call up a taxi if you ended up with a lot of stuff to lug home or the weather turned nasty. –

            With lithium, remember we have to extract only enough to make the first round of batteries. It isn’t consumed and can be recycled.

          • A Real Libertarian

            Plus ya know, it’s not like everyone can drive.

            Even with self-driving cars I doubt toddlers are going to joyride any time soon.

          • Bob_Wallace

            Well, perhaps not toddlers. But I started at 12…. ;o)

          • Conrad Clement

            Bob, what you’re dreaming of applies to drones in the airspace, not to urban road traffic as DARPA, Google, and a few automakers, tend to make you believe (but drones could be manned as well) — and with intercity road traffic transferred to the airspace sooner than you may think, city traffic will be assumed by tiny 1-seater EVs that will just be great fun to drive.

            And, oh, mini-EV-taxi fleets, as well as mini-EV-road-trains replacing buses, will need a lot more professional drivers, therefore representing a highly welcome job provider for ever increasing “fleets” of young idle males produced by an ever increasing fleet of production robots and automatic production machines…

            And if young female drivers are allowed to be part of the deal, they’ll have their babies at an older age on average, which will contribute to an overall decrease of the population growth rate…

          • http://electrobatics.wordpress.com/ arne-nl

            Volt has 16 kWh of battery. 60 kWh is the entry level Model S. Yummie :)

          • A Real Libertarian

            How much lithium is used in lithium-ion batteries?

            It’s not like 1kg of lithium = 1kg lithium-ion battery, there’s other stuff in there too.

          • Bob_Wallace

            IIRC the 24 kWh LEAF battery has 4 kg of lithium.

          • A Real Libertarian

            Thanks.

          • http://zacharyshahan.com/ Zachary Shahan

            Mark Z Jacobson has done research on that and said that there is absolutely no concern of us running out of (or low on) lithium. i think i saw that in his talk at Google: http://cleantechnica.com/2012/07/08/totally-awesome-clean-energy-climate-change-talks-at-google-mark-z-jacobson-mark-ruffalo-marco-krapels/

      • Omega Centauri

        Even a hybrid can do a tolerable job of serving as a generator, just add an inverter. The hybrid has the brains to only run the ICE as needed. Not sure how much you can draw from the car, we have quite a chain:
        ICE to generator to traction battery to ??voltage drop circuitry?? to 12volt battery, to inverter. You probably can’t take kilowatts of juice out.

        • Bob_Wallace

          There’s a bunch of stuff on the web about running inverters from the Volt battery.

  • Marion Meads

    It would be nice to show actual prices charted for each battery manufacturer.

    • Kyle Field

      Speaking about the prices across the industry is a more meaningful number as there are so many battery technologies, manufacturers, consumers…not to mention the whole bulk wholesale vs small volume wholesale vs retail mishmash. On top of that, prices granted to each auto manufacturer (for a specific technology) are likely not made public.

      • Marion Meads

        But of course, there is a basis for calculating the 20% to 30% price drop each year. At least, the basis of it should be shown for it to be more credible, rather than for us to believe the magical number that seemed to be pulled out of thin air. It is not too much to ask if indeed there was a basis for such number. Even if it is an estimate, it still has a basis better than pulling the number from under your butt.

        • Matt

          That was my first thought also. Is it really 20-30%, feels like only last week I read someone saying 7% drop a year (maybe in a Volt story). There is a real real big different in 7% change to 30% change. So data to back that claim up would be very helpful

        • Bob_Wallace

          Yeah. I really want to see the numbers that back up the 20% to 30% per year. That’s a very incomplete claim.

    • goacom

      I am highly skeptical of this claim. It is closer to 7-10% declines per year. Hence a 50% reduction will take between 6-9 years. However that does not include the entire system costs, which may decrease less slowly. Here is a WSJ article on projected cell cost declines. http://online.wsj.com/news/articles/SB10001424127887323981304579081220250333780

      • Omega Centauri

        I had internalized the 7-10% number, now this claim its about three times faster. What changed to cause that (if its real)? Is it sustainable? Obvious there are limts based upon stuff like the material content, this isn’t gonna be 30% per year until batteries are cheaper than rocks.

        • Bob_Wallace

          I think it’s possible prices have dropped much faster than 7-10% during the last couple of years. We were talking about $1,000/kWh batteries and then speculating about $400/kWh batteries. There’s some numbers floating around that suggest prices are under $400 already.

          It’s really frustrating. We’ve got no solid information. Battery and car companies hold this data too tightly for us to get a real picture of how prices are developing.

          30% year by year? Seems very unlikely.

          Some relatively easy gains in early years by building new, more efficient plants with higher automation. And better supply trains. Just buying materials in higher volume can make immediate cost cuts. But at some point the low hanging fruit is all picked. Then the rate of price decline slows.

      • http://zacharyshahan.com/ Zachary Shahan

        i’ll reach out and see if Hans can provide more info.

        • wattleberry

          Did he?

  • jburt56

    Plus the EV buildout reduces the price for residential batteries to store solar energy.

    • http://zacharyshahan.com/ Zachary Shahan

      Something I’m sure ABB is also thinking about.

  • Amy Clavero Real

    MOND or Mind-boggling? Please check Title.

    • Marion Meads

      Although you can search for mondboggling in the internet, they are a result of rampant misspelling of the word mind-boggling, noting that the letters i and o are next to each other in most keypad layout. There are no credible dictionary definition that I can find for mondboggling.

      • Paul

        Monde, french for world.
        World-boggling? Surely.

        • Conrad Clement

          Mond, german for moon.
          Moon-boggling?

    • Kyle Field

      It’s clearly just a miskey…no need to get your battery cables in a bunch :)

      • agelbert

        Good one!

        [img width=30 height=40]http://www.createaforum.com/gallery/renewablerevolution/3-141113185047.png[/img]

        • http://zacharyshahan.com/ Zachary Shahan

          uh oh, looks like your cables got in a bunch trying to insert that image :D

    • http://zacharyshahan.com/ Zachary Shahan

      Haha, thanks. I didn’t stick this post in there, but I must have looked at the title 5-10 times and not noticed that! Anyway, just edited. Thanks!

      • Matt

        First and last letter correct and you can mix the rest or switch out a couple and the brain will still read it.

        • http://zacharyshahan.com/ Zachary Shahan

          i remember some fun reading exercises with the letters all mixed around. it’s pretty interesting.

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