Deloitte Study Sees EV Growth Hampered by Battery Costs, But Rising After 2015
By John O'Dell May 14, 2010Lack of Information, Range Anxiety Also Are Dampers After Early Demand is Filled 
By John O'Dell, Senior Editor
In yet another study hampered by what may be a too-conservative estimate of how quickly advanced lithium battery costs are falling, Deloitte Consulting said Thursday that it doesn't believe electric-drive vehicles will rise above a 6 percent market share over the next decade and could end the 'teens accounting for as little a 2 percent of annual U.S. passenger car sales.
That would be less growth than conventional hybrids have posted in the past decade. (Click on graphs for expanded views.)
The finding was based in large part on a juxtaposition of survey responses from 1,600 consumers who overwhelmingly placed a $35,000 cap on what's they'd pay for an EV or plug-in hybrid with Deloitte's own assumption that estimates of continued high prices for EV batteries through mid-decade.
Deloitte also said that it does not believe, based on its survey, that consumers will be able to put aside concerns about battery-electric vehicle's relatively limited range.
"Few will be happy with range of less than 200 miles," said Deloitte analyst Robert Hill, despite the fact that very few exceed that distance in their daily driving.
There's a big contingent of what the consulting firm calls "early majority" buyers - 1.3 million of them - who have the high incomes, urban or suburban lifestyles, access to private garages (for home chargers) and sufficient concern about the environment and foreign oil dependency to give the first EVs into the market a fairly decent reception.
But EV's prices, limited range - 100 to 125 miles in most estimates - and small size - most of the announced models are compacts or subcompacts - will present significant barriers to growth after the early majority buyers are sated, Hill said during an hour-long web conference.
The forecast is far more subdued than those of EV builders and enthusiasts.
Nissan Motor Co., which is launching the 5-passenger Leaf electric hatchback late this year, has said, along with partner Renault - the French automaker with several EV's scheduled to launch in the next four years - that electrics could take a 10 percent slice of the new-car market by 2020.
High Cost Assumptions
Deloitte based its assumption of EV costs on estimates from other consulting firms that have placed the cost of advanced lithium batteries for electric cars at upwards of $1,000 per kilowatt-hour of energy storage.
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EVs such as the Mitsubishi i-MiEV (left) and Nissan Leaf May be too small, too costly for most, study found.
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But General Motors Corp., which is using a 16 kilowatt-hour battery in its upcoming Chevrolet Volt extended-range rechargeable-battery hybrid, has said that it has gotten costs down to about $600 per kilowatt-hour already.
And while Nissan hasn't disclosed its battery costs, insiders have hinted at numbers below $750/kWh.
Hill said Deloitte expects battery costs to drop by about 40 percent - to $600/kWh - by 2014 and for EV acceptance to increase at that point as production efficiencies and growing volume help battery prices continue falling.
Things would move appreciably faster if Deloitte's numbers are too high and automakers already have already broken the $600/kWh mark.
$4 Gas Would Help
But with gasoline prices at $4 per gallon nationally - a not-unlikely scenario three years down the road - battery costs would have to be at about $425/kWh to make EVs economically feasible to most costumers, Hill said.
The consulting firm's consumer survey found that 69 percent consider the vehicle's actual purchase price, rather than overall cost of ownership, the most importune factor in their purchase decisions and that 73 percent would expect to pay no more than $35,000 - after incentives - for an EV. More than half see prices in excess of $30,000 as a major stumbling block.
The Leaf and subcompact city car EVs such as the Mitsubishi i-MiEV are the only models that so far have been announced with base prices under $35,000.
Most full-service EVs require batteries of at least 20 kWh and up to 30 kWh and at even $500 per kilowatt the cost of the battery alone would still account for $10,000 to $15,000 of a car's cost.
More Marketing
The Deloitte study also found that EVs suffer from lack of exposure - that most people know a lot about conventional hybrids but very little about technologies that move beyond cars like the Toyota Prius and Ford Fusion hybrids.
Automakers, lead by Toyota, have spent - by Deloitte's estimate - more than $10 billion in the past decade marketing hybrids and likely will have to spend close to that to gain the same degree of acceptance for EVs and PHEVS. Conventional hybrids have only achieved about a 3 percent market share in the U.S.
Lack of awareness by consumers, Hill warned, not only means many people won't feel informed enough to make a choice but worse, that many will reject new clean technology vehicles based on misinformation.
Hill cautioned that the report was an attempt to gauge only early acceptance of EVs and plug-in hybrids.
"We are bullish" on the technologies, he said, "but in the long term."
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Deloitte appear to be reading-challenged.
They obviously have not read the price of the Leaf, which plainly has batteries costing far less than $1000kwh, as that would mean that the rest of the car cost $9,000 or so!
How the heck they have the cheek to publish this worthless nonsense boggles the mind - they must be intent on destroying their own credibility.
I can understand, just about, a report coming out just prior to the release of the Leaf's price getting egg on it's face by grossly over-estimating costs - but now?
Now that we've had a comment from the Nissan marketing people, how about some inconvinent truths?
1. While TYPICAL daily driving is within the realm of electric cars in the marketplace, don't forget that on occasion, people want to take longer trips for vacations, family stuff, etc. here the electric car fails badly.
2. Check the market prices for raw materials going into batteries. Costs of material are going up and the forecasts don't show a decline in prices. If you rollback material quality, etc, performance suffers too much.
3. How long do you expect our government to substantially subsidize the vehicles? Take the tax credits and other government support away and you can ad between $7,000 to $10,000 per vehicle.
What was needed was to lay down power lines in the road bed and use induction coils to draw power up into the car. A meter on the car would track electrical use and the info would either be sent like a cell phone call or someone would "read your meter" to determine your electricity costs. If the interstate system was wired, you could really sell electric cars!
kfhistorian,
What has the range got to do with battery coats?
Do concentrate!
BTW, the batteries due from AESC/Nissan in around 2015 should allow greater range, perhaps nearly 200 miles.
Raw materials cost for batteries - do you have any idea what you are talking about?
Battery grade lithium carbonate currently costs around $50kg - you need around 1kg per kwh.
Ghosn expects that the subsidy will be ended within a couple of years - he hopes so, as by then he will have ramped production up to 500,000 vehicles a year, and will be able to do the cars at around present sales price without needing the subsidy - it's continuance would only encourage more competition:
http://www.youtube.com/watch?v=a8qcvr6LZvQ
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