EVs on Path to Become Cheaper than Gas Models

The average all-electric vehicles costs about $4,000 more than a comparable gas-powered model, but improvements in battery technology and manufacturing processes could turn that formula upside down over the next five to six years, a panel of experts forecast during a industry forum on Thursday.

GM's Tim Grewe
GM’s battery chief Tim Grewe, center, said battery prices have been dropping faster than expected.

At least, that’s where things appeared to be heading before Russia invaded Ukraine this week. Perhaps the single biggest challenge the auto industry faces in the transition to battery power is lining up the necessary raw materials, starting with lithium, nickel and cobalt. And the crisis in Europe threatens to send prices skyrocketing while limiting supplies, the panelists warned.

Battery prices have, until now, been “going down faster than we thought (they) would,” said Tim Grewe, General Motors’ Global director of Electrification and Battery Systems, during a virtual panel hosted by Wolfe Research.

Falling battery costs

When the Chevrolet Bolt EV debuted in 2016, GM revealed its batteries cost about $145 per kilowatt-hour. That has been on the decline since then, noted Grewe, as GM upgraded the chemistry of the Bolt’s cells and improved the manufacturing process. Starting with the new GMC Hummer EV, the automaker has migrated to the new Ultium battery technology and expects the cost to soon dip to about $100 per kWh. For a compact model like the upcoming Cadillac Lyriq SUV, that will shave several thousand dollars off the cost.

But that’s just the start, predicted Rod Lache, Wolfe’s senior automotive analyst and the moderator of the Thursday panel. By mid-decade, he suggested, prices will continue to fall by as much as 70% compared to what GM was paying for the cells in Bolt EV.

Chevrolet Bolt EV - on Orion assembly line
When the Chevy Bolt debuted in 2016, batteries prices were $145 kWh.

At $60 to $70 a kilowatt-hour, Lache said, “We can start to see some EV powertrains come down to cost parity” with models using internal combustion engines.

And the panelists agreed that there will be even more opportunity to both drive down costs while also improving the range and performance batteries deliver.

Delivering the next big thing

Industry planners are placing big bets on next-generation solid-state batteries, though Venkat Srinivasan, director of the Argonne National Lab’s Center for Energy Storage Science, cautioned it is far too early to be sure the technology will work in mass production — and when it might replace today’s lithium-ion cells. But that doesn’t mean there won’t be big opportunities to improve the current state-of-the-art batteries.

Batteries consist of several essential components, including an electrolyte, a cathode and an anode. Researchers are focusing much of their attention on the anode side where lithium ions are stores when a battery is charged. Today, anodes are made of graphite but a number of companies are working on silicon alternatives because they can store substantially more power, noted Kurt Kelty, the vice president of Commercialization & Product for Sila. The startup, which has been backed to the tune of $100 million by Mercedes-Benz, hopes to get its silicon anodes into automotive production by 2025.

“And we could ramp this up rather quickly,” said Kelty, who spent 11 years leading the Tesla battery team.

Sila’s technology is already being tested in small consumer electronic applications, like watches. It expects that simply replacing graphite anodes with its silicon will yield 20% higher energy density — the amount of power a battery can store in a given mass. For a factory turning out a gigawatt-hour of batteries annually, that would increase to 1.2 gW “overnight,” forecast Kelty.

And his fellow panelists agreed that silicon anodes could be one of the key breakthroughs needed to bring down BEV costs. The technology would allow a manufacturer to choose between delivering greater range or downsizing a battery pack. The latter approach would, in turn, reduce vehicle weight and permit an automaker to trim the size of other components, such as brakes — further reducing costs.

Getting raw materials in the future

There’s another potential advantage. Silicon is abundantly available, as opposed to graphite which is in shorter supply and, for the most part, is imported from China.

One of the biggest challenges automakers will face, going forward, is lining up supplies of key ingredients. But the industry is planning to ramp up BEV production quickly — GM alone expecting to produce 1 million all-electric vehicles annually in North America by 2025, including as many as 600,000 trucks — so this is becoming a major challenge.

The Detroit automaker is working with a partner that plans to extract lithium from geothermal springs under California’s Salton Sea. The entire industry is working to reduce the amount of those metals in its batteries. Even then, ensuring a steady supply will be challenging — and the crisis in Ukraine could complete matters, especially when it comes to nickel. Russia is the world’s third-largest supplier of that metal. Cobalt, meanwhile, comes from other regions of the world where relations with the U.S. have been strained.

One of the things automakers need to do is try to locate reliable sources, said Argonne Labs’ Srinivasan, and then lock down long-term commitments. But he also noted that this could be difficult because the demands the auto industry alone will make this decade could outstrip current resources. Finding new sources of cobalt and nickel, in particular, will be essential.

In the near term, economic and geo-political uncertainties are expected to cause headaches for the automakers. Prices of raw materials have, in general, been on the rise. Cobalt alone has jumped from a low of around $42,000 a ton last June to more than $70,000 during the last two months. It has now surged above $73,000 as Russia has moved forward in its Ukrainian campaign.

So, while the long-term prognosis calls for a sharp decline in battery prices, said Srinivasan, “2022 looks like the first year cell prices are going to go up” in more than a decade.

The Detroit Bureau Read More