The prices of lithium ion batteries for electric cars are falling rapidly, but perhaps not as rapidly as some observers believe.
A news report in the Times of London claimed Nissan was able to put a lithium battery in its electric Leaf for $8,600, or at a remarkably low $375 a kWh. If so, this would suggest electric cars well below the $30,000 sticker, since batteries are among the most expensive components in the vehicles.
But according to several electric car executives, battery prices haven’t hit such a rock bottom so soon. “We’re seeing significant reductions in the cost of batteries and it’s accelerating,” says Marques McCammon, chief marketing officer at the electric carmaker Aptera. “The cost of batteries is coming down rapidly.”
“We’re seeing significant reductions in the cost of batteries and it’s accelerating,” says Marques McCammon, chief marketing officer at the electric carmaker Aptera.
But to $375 a kWh? Not exactly.
Today batteries are selling to $1,000 to $1,200 a kWH, says Dan Mosher, chief financial officer at CODA Automotive. In eight years, the prices will be dramatically different. But not yet.
That’s because manufacturers assume a steady 5 percent to 10 percent price decline a year for the next five to 10 years, he said. “The race is on.”
The race he refers to is one for capacity. Industry experts now see a sharp increase in production capacity coming online between 2014 and 2017, especially in Japan and the U.S. This increase will push prices lower as producers compete for sales.
Along with the lower prices will come higher capacities, adds Marc Tarpenning, a co-founder of Tesla Motors who has left the company. The capacity, or energy density, of a lithium ion battery is now double what it was in 2003 and the price is similar. “It is hard to imagine that won’t continue,” he said at Electric Car 2.0, the Berkeley-Stanford Cleantech Conference held in San Francisco on Wednesday.
The recent report of a collapse in battery prices is not the first to sweep the industry. Late last year, a General Motors executive let slip lithium ion prices could reach $500 a kWh by mid 2011. Competitors dismissed it as more hope than reality.
Still, the prospect is exciting. Clearly, battery prices are coming down and it is not unreasonable to assume projections are conservative. With lower prices will come more affordable electric cars and rising consumer interest.
As sales climb, production volumes increase and prices fall all the more – a cycle that could work in everyone’s favor except the battery maker.
Posted by Mark Boslet 
