It is common knowledge that, almost without exception, electric cars have a significantly higher price than their internal combustion engine counterparts (especially for electric cars with a range of more than 400 km) and for many, these prices are prohibitive.
So what does it take to make the electric car accessible to more people? Is it even possible at this stage?
To find out how much it costs to acquire something, the first step is to know how much it costs to make it. Andy Palmerconsidered the “grandfather of electric cars” while working at Nissan on the Leaf model, reveals his perspective on the subject.
“At the time of marketing, the cost of goods sold was higher than the manufacturer’s suggested retail price. So it wasn’t just that we weren’t covering our overhead. We didn’t even cover the cost of the materials,” Palmer recalled.
Nissan’s leadership approach to the Leaf turns out to be a strategic decision similar to that made by Toyota when it launched the first Prius hybrid.
However, the EV has a much larger battery than the hybrid, so Palmer continues with some basic calculations: “(Prices of) batteries have dropped from about $1,000 per kilowatt-hour (kWh) back then, to today I’d put them at about 150 dollarsPalmer commented.
Assuming the manufacturers thinking is that you need a 60kWh battery, that means their battery costs $9,000. Add to that manufacturers overhead and 15% dealer markup and the price rises to approx $41,500.
Andy Palmer, a former Nissan senior manager responsible for developing the Leaf. And also a former CEO of Aston Martin
Palmer believes the number will continue to fall up to $80 per kWh for a standard battery, but not for the next few years as the rate of price reduction slows.
Another path to an affordable EV is downsizing the battery. Putting a 24kWh battery (the size of the original Leaf) at $150 per kWh reduces the cost of bringing a car to market to about $20,000without the manufacturer losing money, Palmer estimates.
Improved battery technology also plays a role in reducing costs, and one example is the move to lithium iron phosphate (LFP) cells from current nickel-manganese-cobalt solutions.
Other chemicals that have potential are sodium cells that are resistant as well as solid state batteriesand which, however, have not yet reached commercial scale.
Technical improvements will also help increase efficiency and lead to smaller batteries.
Meanwhile, David Greenwoodan advanced powertrain expert at Warwick Manufacturing Group, explains that the cost of an EV is more than just the purchase price.
“What do we mean when we talk about price? Is it just the purchase price? Or lifetime cost (of the vehicle)? Aspects of vehicles and vehicle design affect costs, but also the charging infrastructureGreenwood points out, adding: “There’s also the question of whether the batteries can be produced more cheaply, but that’s the last thing in the chain.”
In electric cars total cost of ownership perhaps a more significant consideration than with conventional cars, Greenwood believes. “For people who buy the ‘right’ electric car – by which I mean the owner uses the range they are capable of – the total cost of ownership is not a big issue,” he adds.
Finance packages such as leases and personal purchase contracts (PCP) they help reduce the impact of upfront costs and when combined with lower ‘fuel’ and servicing costs, the customer reaps the benefits, Greenwood points out.
“However, the key is not to buy an EV with more battery capacity than you need. If you spend a fortune on a car that can go 500 miles and then only drive 10 miles a day, you’re paying for the battery and all the systems, but you’re not making the fuel savings to cover that,” Greenwood added.
According to him, one of the reasons people buy EVs with relatively high mileage is that the charging infrastructure is not developed to the level expected in 2030.
Greenwood likes the idea of slots for reservable chargingpaid in advance and linked to license plate recognition to protect the booking.
“The charging station manufacturers I’ve spoken to like the idea because the ideal number of devices they need to install is is exactly the number needed plus one spare“, Greenwood shares.
His message is: “The relationship between investment in charging infrastructure and the price of an EV is direct, and if you go from a car that needs a battery with a range of 300 miles to one that needs a battery with a range of 150 miles, you take about 25% off the bill for the raw materials needed to build the car“.
The Chinese model of selling small, light and utilitarian cars for urban driving, costing less than $5,000although they do not meet European regulations, is a concept worth considering in the future.
Battery chemistry will continue to evolve, Greenwood believes: “Most EVs so far have been focused on long range. If you have the right infrastructure, you can build a battery using cheaper lithium iron phosphate cellsas one day they will be replaced by sodium-ion counterparts that will offer even lower prices.”
Although far from commercial application, sodium ion cells are also more environmentally friendly. Besides sodium being abundant, the cells don’t need copper or cobalt and the electrolyte is simpler.
What seems obvious, however, is that the shift to cheaper electric cars will require more than technical evolution. The relationship we have with our cars, the choices we make and the way we use them may also need to change.
A simpler design can reduce costs by 10%
A crucial aspect of reducing the price of an electric car is the way vehicles are designed. Currently, electric vehicle batteries consist of a large number of cells manufactured in modules, assembled in a different package design for application in each car.
“A manufacturer can do three different designs per module and put it in eight different designs per packto achieve economies of scale at the module level,” commented Greenwood.
As volumes increase, achieving economies of scale at the module level loses some of its importance, and it becomes more cost-effective to design cells for a specific vehicle and install them directly into it using the “cell to vehicle“.
This approach will result in much larger cellsremoving a layer of the packaging materials needed in a battery, so the price drops, along with size and weight.
While in the past batteries from concerns such as Tesla contained thousands of tiny cells, the future will offer batteries containing hundreds of much larger cellsGreenwood also believes.
More on the topic:
The Aixam e range includes three models that do not require a driver’s license
These models will be specifically aimed at the brand’s youngest buyers
More and more manufacturers are “sounding the alarm” after the slowdown in sales growth