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EV Battery Costs on Track to Hit Key Target by 2023

The goal is price parity between electrics and IC vehicles.
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Pundits agree that electric cars won’t gain mainstream traction until the cost of their batteries drops to $100 per kilowatt-hour.

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That goal, estimated a decade ago by the U.S. Dept. of Energy, will be reached by 2023, predicts IHS Markit.

BloombergNEF research, which came to the same conclusion several months ago, says the current average is about $156/kWh. That’s down from more than $1,000 in 2010. IHS calculates the current average at about $122 and expects costs will fall to about $73 by 2030 as production economies of scale improve.

The Bigger Picture

But consumers buy cars, not powertrains. In the case of EVs, vehicle range, charging time and battery longevity are important considerations too. A cheap battery that underperforms is no great bargain.

So battery cost is a big deal. But the overall vehicle performance is more important. The trick is to deliver on both counts. Battery developers promise to do just that with next-generation chemistries and cell architectures.

The latest example is Tesla’s new battery, which is in pilot production now. The company claims its redesigned “biscuit tin” devices can store five times as much energy and deliver 16% greater driving range at half the cost of its current batteries. New chemistries, including solid-state batteries, promise gains of similar magnitudes.

The ultimate goal for EVs is to reach overall cost parity with piston-powered vehicles, regardless of where the cost-cutting comes from. Nissan has estimated the pivot point will arrive in 2025.

Relentless advances in platform design, traction motor performance and production efficiency will be big contributors. At the same time, piston powertrains are getting pricier because of the technology required to meet stricter emission limits. That means prices are converging on a slowly rising parity point.

Bottom Line

One by one, the hurdles facing EVs—worries about cost, performance and range—are melting away. For OEMs with billions riding on the electric models they’ll be releasing over the next few years, the sooner the better.

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