Battery Costs Unlikely To Fall Without New Breakthrough

(Detroit Free Press/MCT) -

Big investments in lithium-ion battery manufacturing plants won’t significantly reduce the cost of making batteries, a revised outlook that cautions that sustainable growth in electric vehicle sales will happen later rather than sooner.

For General Motors, that means the $40,000 Chevrolet Volt, a plug-in electric vehicle powered by a 435-pound lithium-ion battery pack, could stay expensive for years.

It also may limit the commercial potential of Tesla Motors, which sells luxury electric vehicles ranging from about $60,000 to more than $110,000. In January, Nissan cut the price of its Leaf S from $35,200 to $28,800, before tax credits. For the first two months of this year, Leaf sales rose 13 percent, but only to 1,303.

Through the first two months of this year, however, alternative powertrain vehicles did not do badly. Sales of gas-electric, nonrechargeable hybrids rose 29 percent to 74,784. Sales of plug-in hybrids and all-electrics more than tripled to 10,081, according to Hybridcars.com.

Still, much higher volumes are needed to bring down the cost faster.

Jon Lauckner, GM chief technology officer and president of the company’s startup investment operation, said in a recent interview that a breakthrough is required to reduce the cost of making battery packs.

“There are some advantages to cost that will accrue due to scale,” said Lauckner, who oversees GM’s research-and-development arm. “But the big steps are going to be the technology. It’s moving from the current generation of technology into the Gen 2 – and into the generation beyond that.”

Kevin See, analyst for Boston-based Lux Research, said it’s “not realistic or feasible” for automakers to significantly cut the price of lithium-ion batteries.

“There’s going to be incremental improvement,” See said. “But we don’t believe it will be enough to spur the huge adjustment everyone was hoping for.”

The consumer electronics industry, he said, already has made most of the advancements that are possible in lithium-ion batteries, which also power devices such as cell phones and laptop computers. The next frontier may come in technologies such as lithium-air and lithium-sulfur batteries.

“The incremental improvement right now is literally like wringing out a rag that has been squeezed so tight,” said Jeff Bocan, managing director of global investment firm Beringea, which has invested in battery technology. “There does need to be a substantial leapfrogging of the technology to get electric vehicles to be competitive from a performance and cost standpoint.”

Sales of hybrids and electric vehicles are expected to remain low for the rest of the decade; they’re projected to rise from 3.4 percent of the U.S. market in 2012 to 7.7 percent in 2019, according to J.D. Power & Associates. That’s doable, but it’s a stretch as long as gas prices stay near or below $4 a gallon.

Mark Reuss, president of GM North America, said one way to lower the Volt’s cost would be to design a special vehicle platform to accommodate its T-shaped battery pack. The Volt is based on the architecture used to produce GM’s global compact sedan, the Chevrolet Cruze.

“If we get a car that is built to carry a battery and with the right knuckles and brakes, that are sized exactly for the car, you could decrease the size of the battery pack, the size of the electric motors and get equivalent range at much lower cost,” Reuss said.

While automakers are investing in their own battery research, some of the most promising technology is being developed by startups.

For example, Ann Arbor, Mich.-based Sakti3, a spinoff from the University of Michigan, is developing a next-generation manufacturing technology to improve the production process for batteries.

“They’re taking liquid out of the batteries,” said Beringea’s Bocan. “When you do that, a whole lot of interesting things happen. You can make them extremely cheaply.”

But Sakti3’s technology is at least a few years away from being production-ready.

President Barack Obama proposed in his State of the Union address that the government devote a portion of its oil and gas revenues toward funding “new research and technology to shift our cars and trucks off oil for good.”

Without a technology breakthrough that brings down the cost of electric vehicles, the U.S. may have to settle for reducing, rather than ending, oil consumption.