Electric car skeptics like to point to high battery costs as a reason the vehicles won’t become anything more than a niche product for rich celebrities and eco-minded folks who can afford them.
A recent study in the journal Nature Climate Change makes such beliefs seem old-fashioned. Swedish researchers from the Stockholm Environment Institute looked at more than 80 different cost estimate reports from between 2007 and 2014 to find out how much the cost of lithium-ion battery packs, the kind used in EVs, has been coming down.
They learned that cost estimates over that period showed a decline of about 14 per cent annually, from above $1,000 (U.S.) per kilowatt-hour to $410, with the cost for market-leading battery-electric vehicle manufacturers even lower – about $300.
“We reveal that the costs of Li-ion battery packs continue to decline and that the costs among market leaders are much lower than previously reported,” they concluded.
One need only look to Tesla Motors for evidence. Tesla Energy, the new subsidiary it launched on April 30, unveiled a new residential lithium-ion storage product called Powerwall that costs $350 per kilowatt-hour (before installation and the cost of associated power electronics). The same batteries are used for Tesla vehicles.
In March, Deutsche Bank released a report predicting 20 to 30 per cent annual cost reductions for lithium-ion batteries over the next five years, with “mass adoption potential before 2020.”
The trend is benefitting more than EVs. A report from GTM Research and the U.S. Energy Storage Association found that U.S. energy storage capacity has expanded five-fold since 2013 and will growth another 11-fold to 861 megawatts by 2019.
These are similar growth rates to those experienced with solar PV.