Other factors will have a less dramatic but no less significant impact on the adoption rate of EVs in the United States. One is the cost of Li-ion batteries.
Battery prices (including the electronics) are hovering at around $1,000 per kilowatt-hour but are declining steadily, according to Pike Research. Typically, the battery system accounts for about 50 percent of the cost of the vehicle. Most analysts agree that if EVs are to become cost-competitive with internal-combustion engines in coming years, the battery price must drop below $500/kWh. That won’t happen until after 2015, Pike Research predicts. Whatever the trajectory of the price decline, however, tags will continue to drop as competition intensifies, production volumes increase and power density improves.
Indeed, the market for Li-ion batteries is projected to grow to about $50 billion by 2020, up from about $11 billion two years ago, according PRTM’s Hazimeh.
“We are on a trajectory to reach $300/kWh by 2018,” he said.
As for EV battery technology, most pundits do not expect any major battery manufacturer to shift production away from Li-ion before 2015. Instead, they will refine the chemistries, replacing precious metals with less costly materials to drive down the cost/kWh. By 2020, however, next-generation technologies such as lithium-air and zinc-air will enter production.
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Japanese and South Korean companies collectively account for about 75 percent of worldwide Li-ion battery production. Fierce competition among the major players, including LG Chem, Panasonic, Samsung and Sony, has kept downward pressure on prices. How the crisis in Japan will affect the competitiveness of Japanese battery makers and the price/kWh of their products isn’t yet clear.
An emerging challenger to Japan and Korea is China. Thanks to $15.2 billion in government funding commitments through 2020, Chinese automakers are ramping up investments in R&D and production of EVs and batteries. China is also making substantial infrastructure investments, including construction of charging stations in pilot cities. Like the United States, China has set a goal of 1 million hybrid passenger vehicles on the road by 2015, according to China Outlook Consulting.
To date, the United States has been conspicuously absent from the EV battery business. But in 2009, the Department of Energy announced a commitment of up to $2 billion in American Recovery and Reinvestment Act funds for the manufacture of advanced batteries and related drive components, and up to $400 million for transportation electrification demonstration and deployment projects. (See table, right, for a list of the 10 largest awards to date.).
The United States in 2009 had only two factories manufacturing advanced vehicle batteries and produced less than 2 percent of the world’s advanced vehicle batteries, according to the DOE. By 2012, the department projects, 30 U.S. factories will be online, and the country will have the capacity to produce 20 percent of the world’s advanced vehicle batteries. By 2015, that share will be 40 percent.
One of the 2009 DOE grant recipients was A123 Systems, which received $249 million to support the development and manufacture of nanophosphate Li-ion batteries and systems. Last September, A123 Systems opened a plant in Livonia, Mich., that today is the largest Li-ion automotive battery production facility in North America. The company expects to expand manufacturing capabilities by up to 600 megawatt-hours, to 760 MWh, by the end of 2011.
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