Study Concludes Battery Cost Will Prevent EVs From Going Mainstream for Years

Study Concludes Battery Cost Will Prevent EVs From Going Mainstream for Years

By Scott Doggett January 7, 2010

Electric vehicles are unlikely to become high-volume mainstream products by 2020, according to a study by Boston Consulting Group.

Stubbornly high battery costs will be the main culprit, said Xavier Mosquet, leader of the firm's global automotive practice. The consulting group is often hired by automakers to conduct market research for them.

Mosquet said automakers are unlikely to reach their long-term cost target of $250 per kilowatt-hour for lithium-ion batteries. The current price is $1,000 to $1,200 per kilowatt-hour.

The study comes as automakers prepare to promote electric vehicles at the 2010 North American International Auto Show in Detroit next week.

Mosquet said that without a sharp rise in gasoline prices, heavy government subsidies or an unexpected breakthrough in battery technology, EVs won't attract mainstream car buyers.

Talks with researchers show that no game-changer is likely to come in battery technology, he said.

"Nobody so far has found the silver bullet," Mosquet told subscription-based Automotive News. "A number of OEMs [original equipment manufacturers] are going to invest money and not get the return unless there is a new technology or a new oil shock."

Today's prices mean that current 20-kilowatt-hour EV batteries cost about $20,000. Although the price may fall to $8,000 by 2020, that won't be low enough. Consumers want a three-year payback for the purchase cost of an EV compared with an internal combustion engine, Mosquet said.

In 2020, the report projects that 26 percent of vehicles sold in major developed markets will have some form of battery power. That would translate into about 14 million vehicles.

But the study expects that the vast majority - about 11 million vehicles - will be hybrids, with EVs selling only about 1.5 million vehicles annually. Electric vehicles with some onboard way to recharge the batteries will account for another 1.5 million units, the report said.

Mosquet said there may be valid reasons to develop EVs, such as covering the possibility of abrupt increases in petroleum prices. And the 1.5 million-unit annual EV segment could be lucrative for battery makers and a few automakers, he said.

But Mosquet said automakers should move cautiously: "What we're saying is be careful."

The report assumed that the cost of the batteries would be included in the purchase price of EVs and electric hybrids. It did not include the possibility that the batteries may in effect be rented and frequently swapped, as has been proposed by various businesses, including Better Place.

Scott Doggett:  is an AutoObserver.com Associate Editor.