Cheaper Electric Vehicle Batteries on the Horizon

Photo: Michael Movchin / Felix Müller, Wikimedia CC

By Natasha Lasky, ODP Contributing Writer

Most Americans are aware that electric vehicles are better for the environment, but one of the issues deterring consumers from purchasing them is the cost — electric vehicles (EVs) are, on average, $19,000 more expensive than gas cars. But that may be about to change, giving consumers more affordable options. The number of electric vehicle models available to consumers is expected to more than triple in the next three years, from roughly 40 to 127 in the United States, as they’re expected to get much cheaper. Batteries are typically the most expensive part of electric vehicles, but the United States Department of Energy expects that battery costs will fall dramatically.

Why this Matters: The United States is at a crossroads in its relationship with gas-powered vehicles.   While more millennials are buying cars than ever given their relative safety during the pandemic, states are implementing increasingly aggressive regulations on gas-guzzling vehicles. California, for example, announced its aim to phase out the sale of all gas-powered cars by 2035. President Biden has also proposed a “cash for clunkers” program in his climate plan, which gives customers money for their used cars so they can buy new, American-made EVs. Lower prices for electric vehicles is crucial to ease American consumers into a world without conventional cars.

When will it be cheaper to buy an EV than a gas car?

Right now, the sticker price on an EV is higher than its conventional counterpart.  One of the Department of Energy’s key goals is to develop battery technology that costs the same as an internal combustion engine (ICE). However, it’s unclear exactly when and how far these prices will decline but the picture is coming into better focus. According to Utility Dive, the Electric Power Research Institute (EPRI) estimates that the current cost per kilowatt-hour (kWh) for EV batteries is between $120/kWh and $200/kWh at the battery pack level, which includes an integrated battery management system and thermal management. The DOE’s goal is to create a battery pack that costs $80/kWh by 2030, which is price parity with conventional cars, while EPRI says that the best case would be $55/kWh by 2030.  The price also depends on the size of the battery pack.  Battery electric vehicles with 40 kWh packs, which amounts to about a 160-mile range, “are already at initial cost parity with ICE vehicles today, and have a far smaller lifetime cost of ownership when including maintenance, fueling, etc,” according to EPRI.  At $80/kWh, vehicles with 60kWh packs would achieve initial cost parity with ICE vehicles, EPRI estimates.

Current estimates suggest that batteries that cost $100/kWh would be available as soon as 2024. Some experts suggest that by 2026 it should be significantly cheaper to build an EV than a gas car.  This would be a major feat for the transportation industry, given that transportation is the biggest source of carbon emissions in the country.

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