A new study suggests that lithium ion batteries used in cars could be cheap enough to compete with internal combustion engines in the next 20 years.
The study by consultancy McKinsey & Company suggests that the price for a complete automotive lithium ion battery pack could fall from $500–$600/kWh to about $200/kWh by the year 2020 and as far as $160/kWh by 2025. With gasoline prices around $3.50 a gallon, EVs could compete at the cost-of-ownership level with traditional gas cars according to the study.
A lot could happen in 20 years, but the study took more than 40 underlying factors into account in determining its price prediction. In doing so, it suggested three figures would play a key role in driving the price down at an accelerated rate.
First, it cited manufacturing at scale: the idea that as production increases, the cost for that action will decrease. Second, an expected decrease in the cost of components. Currently, components account for roughly 25 percent of the total cost per unit, but the margin on those pieces is expected to fall from its current 40 percent to 20, which would decrease the overall price. Third: increased battery capacity. As time goes on, batteries are expected advance and hold more energy, meaning less would be required to offer the same power.
[Source: Green Car Congress]