The Electric Car Battery Cost Conundrum vs. the U.S. DOE

The idea of driving an electrically powered car that you simply plug-in at the end of the day is immensely attractive. I also suspect that most of us believe we will one day buy one -- especially if the purchase and battery replacement cost comes down as a result of increased production. After all, cost reduction as a product of scaled economy (lower cost per unit as production efficiencies increase) is inevitable ... right? Probably not.

Today's WSJ reports that "a number of scientists and automotive engineers believe cost reductions will be hard to come by." Their antithetical reasoning stems from the fact that 44% of production costs are comprised of parts and material that will not become less expensive at greater volumes and may, in fact, rise. This is "mainly because more than 30% of the cost of the batteries comes from metals such as nickel, manganese and cobalt. (Lithium makes up only a small portion of the metals in the batteries.) [and] Prices for these metals, which are set on commodities markets, aren't expected to fall with increasing battery production -- and may even rise as demand grows, according to a study by the Academies of Science released earlier this year and engineers familiar with battery production."

The Journal also states "The U.S. Department of Energy has set a goal of bringing down car-battery costs by 70% from last year's price by 2014." But Jay Whitacre, a battery researcher and technology policy analyst at Carnegie Mellon University, "said in an interview [that] the government's goals are aggressive and worth striving for, but they are not attainable in the next three to five years. He predicted it will be a decade at least before that price reduction is reached."

Outside of the Department of Energy, there seems to be very little disagreement. Even "Toyota executives, including Takeshi Uchiyamada, global chief of engineering, say their experience with nickel-metal hydride batteries makes them skeptical that the prices of lithium ion battery pack prices will fall substantially." Unrealistic goals and claims bestowed upon industry by government are disruptive, costly and confusing to consumers.

Wouldn't be great if the DOE actually took the lead on disseminating accurate information to the market place? And furthermore, why don't they?

William Busch

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