Batteries for EVs: Breakthroughs & Challenges

03.25.19 | Member Reports | By:

There are a number of challenges to widespread EV adoption around the world, many of which I have written about for the last three years, including their high costs, consumer preference for the internal combustion engine vehicle (ICEV), the high costs to governments to bring EVs to market and encourage consumer uptake, and the lack of infrastructure, among other issues. (See reports Jan. 15, 2019; June 21, 2018; Mar. 28, 2018)  This report focuses squarely on batteries for EVs, in particular future battery breakthroughs and expected manufacturing over the next 10 years.

Today typical batteries used in EVs are based on lithium-ion technology which has in the last few years reached a development level enabling the design of vehicles that are beginning to match (and some would argue, surpass) the performance of internal combustion engine vehicles (ICEVs). Current battery packs for light-duty applications have gravimetric energy densities of 200 Watt-hours per kilogram (Wh/kg) and volumetric pack energy densities of 200-300 Watt-hours per liter (Wh/l), according data cited by IEA.[1] Battery performance has improved and is continuing to improve while battery lifetimes are getting longer as well. In fact, battery lifetime now is as long as the expected lifetime of a car or about 175,000 km (109,000+ miles) of driving. Battery chemistry has improved, charging times are faster and manufacturing is growing, as shown in this report.

As a result, battery prices are continuing to decline. Between 2010-2018, battery prices declined 85%; between 2017-2018, 18%, according to Bloomberg New Energy Finance’s (BNEF) annual battery survey. However, to really make EVs price-competitive with ICEVs on an unsubsidized basis, EV battery packs need to fall to a cost of $100/kWh.[2] Experts I talked to for this report say that will most likely happen around 2030. That’s challenge number one: getting prices down at that level, or even lower. Experts that I talked to in the auto and battery industries believe that will happen, even with the recent spike in prices of materials such as lithium and especially cobalt.

The consensus was also that LIBs will remain the battery option of choice for EVs for now (10-15 years or more) and that they will be further improved over time.  More mass manufacturing planned, the “Gigafactories” will further drive down costs. Another big challenge however, discussed in the section below, is recycling the batteries. There is the challenge of figuring out the “afterlife” of an EV battery and what that supply chain will look like, and then there is the challenge of setting regulations governing the recycling regime. My view based on research and interviews with experts is that this will be surmounted.


Key Points

  • Battery prices continue to decline for EVs, but will not reach $100/kWh until around 2030. Reaching this level will help EV costs reach parity with ICEVs.
  • My view based on my research and discussions with numerous experts for this report is that this is going to happen, but from incremental improvements to lithium-ion batteries (LIBs).
  • Other technology options will be available after 2030.
  • Massive scale up of battery factories will help drive prices further downward. The major expansion is happening in China.
  • The recycling regime(s) for EV batteries have not been figured out. This includes the regulatory regime in many countries as well as the business case/supply chain. I believe based on discussions with experts that this will be sorted out in the next five years or less.

[1] International Energy Agency, “EV Outlook 2018,” June 2018 available https://webstore.iea.org/global-ev-outlook-2018 (hereinafter “IEA”).

[2] See Baes, et al., Arthur D. Little, “Future of Batteries: Winner Takes All?”, May 2018 available at http://www.adlittle.com/sites/default/files/viewpoints/adl_future_of_batteries-min.pdf.

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