Report: Reducing Battery Cost is Key to Electric-Vehicle Adoption

March 27, 2012

Scale-up alone is unlikely to drive costs low enough for mass adoption, according to Lux Research.

The key to growing the market for electric vehicles and plug-in hybrid electric vehicles is reducing the cost of lithium-ion batteries.

That's the conclusion of a report by Boston-based Lux Research, which predicts that the effects of production scale-up and technology improvements will cut nominal battery-pack costs to $397 per kilowatt-hour in 2020 -- far short of the $150-per-kilowatt-hour target set by the U.S. Advanced Battery Consortium.

"Vehicle applications demand a different scale in both size and performance, and no other incumbent technology combines the power and energy performance of [lithium-ion] batteries," said Kevin See, Lux Research analyst and the lead author of the report titled "Searching for Innovations to Cut Li-ion Battery Costs."

The fate of plug-in vehicles is tied to the cost of lithium-ion batteries, See added, "so developers need to focus on the innovations that have the biggest impact on cost."

Lux Research looked at the innovations "that could drive disruptive decreases in cost necessary to spur growth of the electric-vehicle market." Among the firm's conclusions:

Materials improvement and scale are insufficient to cut costs. While scale does have a significant impact in driving costs down, it is not likely to lead to a disruptive drop in battery-pack costs unless coupled with other innovations.
Cathodes remain the biggest target. Cathode capacity and voltage improvement hold much more value than anode innovation. In the optimal case, with a maximum voltage increase of 1 volt and capacity increase of 200 mAh/g, the nominal pack cost dropped 20%.
Beyond lithium-ion remains a focus. Technologies such as Li-air, Mg-ion, Li-S and solid-state batteries push past the limitations of lithium-ion batteries and achieve higher energy densities and specific energies. Each technology has its supporters -- PolyPlus and IBM for Li-air; Toyota for Mg-ion; Sion Power and BASF for Li-S; and Sakti3 for solid-state batteries -- but all face significant obstacles.

Regarding the last point: A clear leading contender that can meet strict requirements on cycle life, power performance and manufacturability has yet to emerge, Lux Research says.

Josh Cable | Former Senior Editor

Former Senior Editor Josh Cable covered innovation issues -- including trends and best practices in R&D, process improvement and product development. He also reported on the best practices of the most successful companies and executives in the world of transportation manufacturing, which encompasses the aerospace, automotive, rail and shipbuilding sectors.

Josh also led the IndustryWeek Manufacturing Hall of Fame, IW’s annual tribute to the most influential executives and thought leaders in U.S. manufacturing history.

Before joining IndustryWeek, Josh was the editor-in-chief of Penton Media’s Government Product News and Government Procurement. He also was an award-winning beat reporter for several small newspapers in Northeast Ohio.

Josh received his BFA in creative writing from Bowling Green University, and continued his professional development through course-work at Ohio University and Cuyahoga Community College.

A lifelong resident of the Buckeye State, Josh currently lives in the Tremont neighborhood of Cleveland. When the weather cooperates, you’ll find him riding his bike to work, exercising his green thumb in the backyard or playing ultimate Frisbee.