How electric cars will become affordable

The challenge for electric vehicles is how to make them affordable. Industry leaders at the Business of Plugging In conference in Detroit this week conveyed some ideas about how to put electric vehicles’ cost on par with conventional cars.

Why are they so expensive today? There are three main reasons:

• Car batteries are an emerging technology
• Automotive-grade electronic components need to be much more robust than those currently built for cell phones and other devices, therefore driving cost.
• No such parts are mass produced today, preventing economies of scale.

Many electric-car components today have to be custom made. One example cited by Tony Posawatz, the director of the Chevrolet Volt program, is the on-board charger. Posawatz says the charger cost GM two or three times what it could have, because no company mass-produces a large enough charger for the Volt’s 16-kwh battery pack--one capable of charging from both 110- and 220- volt outlets, lasting for 10 to 15 years in harsh environment including extreme hot and cold temperatures, and enduring constant vibration. Once production of the Volt and other electric cars ramps up, such chargers will become commodities (like cell-phone chargers today) and will therefore become less expensive.

But the charger is only one example. Procuring a steady supply of batteries is even more challenging. Currently, no company builds lithium batteries large enough to power a car in North America. So batteries, known as the heaviest part of an electric car, have to be transported from Korea. They have to come by ship, because they tend to get damaged by the high altitude and cold temperatures in cargo planes, which would have added even more cost anyway. Today, as automakers ramp up production, there is a lot of competition for the relatively few batteries large enough for electric cars. The Volt’s battery is said to make up about $16,000 of its estimated $40,000 price tag. That’s $1,000 per kilowatt hour. So reducing the price of the battery will be key to bringing down the price of the car. GM says its target is $250 per kwh, which would make the next generation Volt competitive with gas-powered cars.

Meanwhile, some electric-car experts at the Business of Plugging in conference observed that the Volt’s high $40,000 price may help it succeed at first. Only committed electric-car fans will buy them, and they may be more willing to endure some inconvenience as early adopters. Other business models that are being talked about are leasing programs for the batteries and a swapping program, much like turning your empty gas grill’s propane tank for a full one. Not worrying about the battery as an integral part of the car might make the transition to electric cars more palatable. Government subsidies, meant to encourage EV use are already in plan in Israel and Denmark.

—Eric Evarts

Edited 11/2/09

Comments

[Dave]

Why did GM turn down A123 based in Boston for LG Chemical in South Korea (when it is so expensive to ship)? Since the government owns a majority share of GM nowadays, can we get A123 back on board. I would love to see an American based start-up making it big in the EV field.

[Paul Scott]

You marred an otherwise good blog with the comment “early adaptors (sic)” (read suckers)".

I'm an early adopter of the Toyota RAV4 EV and consider myself lucky to have purchased the vehicle 7 years ago for the incredible price of $42,500. After the federal and state tax rebates, the net cost was $30K. The gas version of the RAV at the time was about $19,000.

However, I value the fact that for 7 years and 75,000 miles, I haven't polluted your air, you kid's air, or anyone else's. Nor have I given any money to the oil companies, and by extension, the Saudis. None of my money has gone to buy the bombs and bullets that are killing our soldiers.

I choose to power my house and car with electrons generated by sunlight falling on my house. It doesn't get any cleaner than that.

Nor does it get any cheaper to drive. My electric bill for the entire year is about $100. That's for both the house and car. We haven't been to a gas station in 7 full years.

The early adopters I know are all good people who value a clean environment, and strong economy and a country safe from having to depend on our enemies for the oil that powers our transportation.

When these new EVs hit the market next fall, I expect to see thousands of good Americans rushing to be the first on their block to make the switch from dirty, expensive foreign oil, to clean, inexpensive renewable electricity.

Once you get yours, Eric, you'll know what I mean.

BTW, I could sell my RAV today for more than I paid for it.

[Cale]

Paul's comments will certainly strike a cord with a great many potential electric car customers. Overall, I think that's a good thing.

But it's no substitute for a more complete portrayal of the world we live in. Anyone that says that driving electric cars and putting solar panels on their roofs will end war and solve environmental challenges is guilty of gross oversimplification.

I don't live in one of the "solar" states, so the sun doesn't shine on my house year round. We do have hydro power though I don't brag online about how "clean" it is. Those living in other "non-solar" parts of the world will find coal fired electricity generation an economical source to "fuel" their electric cars and I won't blame them for using it. We can't all live in So Cal.

BTW, when CR wrote "suckers", I knew exactly what they meant. I bought a LCD flat panel TV when they were 40% smaller and 400% more expensive than they are today. Ouch!!! I did the same with digital cameras, PDAs, DVD players, the list goes on. I've been burned by early technology costs and I'm in no hurry to jump early for electric cars.

[hsr0601]

In place of selling battery, leasing it represents not merely holding the price down but taking charge of its quality issue, from my position. And it is benefiting its recycling, as well.

[Bob Wallace]

Soon coming battery price decreases...

"TOKYO, Oct 1 (Reuters) - Japan's Panasonic Corp (6752.T) said on Thursday it has developed a technology that binds together standard lithium-ion battery cells used in laptop PCs to power electric vehicles, taking aim at growing demand for green cars.

The new technology will likely enable Panasonic to make electric car batteries at half the cost of lithium-ion batteries that are developed solely for electric cars, since it can use existing battery plants and production expertise, the company said."

http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUST21755220091001

[Bob Wallace]

Cale - were we to power EVs totally/100% with coal-generated electricity we would enjoy about a 40% decrease in CO2 emissions. Internal combustion engines are very inefficient, 80% to 90% of the energy in a gallon of gasoline either goes out the tailpipe or is given off as heat. Only 10% to 20% of the energy in a tank of gas is used to make the car move.

Coal plants are more efficient (less CO2 per unit of electricity) and electric motors are extremely efficient.

Then, since we get less than half our electricity from coal the amount of CO2 drops significantly lower. 60% as much CO2 from coal plants X 50% electricity from coal = about 30% as much CO2 from a grid powered EV as from an fuel powered car.

(And you may not live where there's lots of sun. But you probably live where there's either lots of wind or close enough so that cheap wind power can be shipped to you via HVDC transmission lines.)

[fran]

I agree with Dave that we should be using a manufacturer who at least assembles the battery pack in the US. We need jobs, right?

[Jeff Bartlett]

Paul and Cale: We struck that sentence from the post referring to "suckers." Originally, it was meant as a tongue-in-cheek reference to the risks of being first in line. However, on reflection, early adopters tend to embrace such risks for being first and maybe motivated to purchase a car by a wide range of reasons. Ultimately, we won't recommend a vehicle until it is ready for prime time, whether it is early or late.

[David Brodbeck]

Paul, not to rain on your parade, but the $23,500 difference in price could have bought you 141,000 miles worth of gas at $4/gallon. Electric cars just don't pencil out cost-wise, especially since the gasoline cars are more capable. (Longer range, etc.)

I tend to ignore the claimed environmental benefits because they ignore the environmental cost of manufacturing, shipping, and disposing of heavy batteries that tend to involve toxic materials.