Falling battery prices boost outlook for electric vehicles

EVs may be able to compete directly with petrol-driven cars on cost a lot sooner than most people think. Policy-makers, transport and energy planners, and investors should take note.

Opinion is divided about what role electric vehicles could play in a low-carbon future. With no exhaust fumes and far greater efficiency at turning energy into kilometres, they certainly offer a lot of advantages over traditional petrol or diesel vehicles in a scenario of continued high private mobility. But when last year, we studied the reasons why Sweden is lagging so far behind our Nordic neighbours in terms of EV take-up, we found a lot of scepticism about the potential of EVs.

Much of this scepticism was linked to a perception that they are too expensive to have major market impact, and are likely to remain for the foreseeable future. Battery costs are the biggest factor keeping electric vehicle propulsion systems pricier than petroleum-driven engines. As long as battery costs remain high, the manufacturers of electric vehicles have to make a trade-off between range (i.e. how far the vehicle can go before it needs recharging) and price. This has been a major obstacle to increasing the market share of EVs, particularly outside the luxury niche they currently occupy.

However, in reviewing the available literature we found a puzzling gap between the very high battery cost estimates being used by many analysts and researchers – and influencing policies, plans and investment decisions – and signs that battery costs have been falling rapidly. So we decided to investigate.

Source: Climate Home, UK