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Writing for Electrive, Christoph Schwarzer reports on a recent conversation he had with Ines Miller of consultancy P3 Group, a company whose motto is “business as unusual.” Miller, who is an expert in all aspects of traction batteries for electric vehicles, writes that the automotive industry is currently paying about €54 per kilowatt-hour for LFP battery cells and €58 per kilowatt-hour for NMC battery cells.
Three years ago, when the price of battery-grade lithium was soaring into the stratosphere and supply chain interruptions were affecting industries all around the globe, LFP batteries were costing manufacturers €127 per kilowatt-hour, with NMC batteries costing then €140 per kilowatt-hour — both more than double their cost today.
Schwarzer writes that as cell prices continuing to fall, the global ramp-up of electric vehicle production is “not only ecologically inevitable but also economically. Therefore the success of electric cars is inevitable if the economic advantage becomes clear across more and more markets and scenarios…..which is roughly the situation today.” At today’s prices, the 81 kWh battery for a Kia EV3 costs the manufacturer €4,700.
“We expect prices to fall by a further 10 to 15 per cent by 2030, ” Miller says. “Further price reductions will come partly from capacity expansions at factories and partly from production process improvements as well as modifications in cell chemistry.”
That is wonderful news for companies like CATL and BYD which can build batteries in China and import them to European customers, but it is not such good news for European cell factories. According to P3, the prices quoted refer to cells imported from China, including all export costs and the mandatory battery passport. These batteries are more than 20% cheaper than cells manufactured in Europe, regardless of whether the production site is operated by a Chinese or a European company.
P3 expects demand from batteries to increase from around 0.3 TWh per year today to roughly 1.6 TWh by 2035 — a fivefold increase. Approximately 70% of batteries will be devoted to powering electric vehicles, and 10% commercial vehicles, and the remainder to grid and home storage.
A Battery For The Volkswagen ID.1
Schwartzer notes that as Volkswagen designs its small ID.1 model starting at €20,000, the cost of the battery will be a prime consideration. The company may decide to offer the car with a 30 kWh battery to meet its price target, with larger batteries available at higher price points. The basic car would meet the needs of drivers who need a car for commuting or driving to the local grocery store, while the higher priced models would suit the needs of those who regularly drive longer distances.
Increasing the battery size to 55 kWh would increase the cost of the battery to the manufacturer by €1,250, but the additional range might mean buyers would be willing to spend an extra €3,000 to €4,000, which would go a long way toward making the car profitable for the manufacturer — Volkswagen, in the case of the ID.1.
The automotive industry is now making money on every electric car sold, Schwartzer claims. CleanTechnica readers, who know a thing or two about the EV revolution, may choose not to accept his assertion at face value, but the question remains whether the margins for electric cars are as high as they are for infernal combustion cars.
Volkswagen intends to achieve the same profit margins with its MEB Small platform as with its comparable combustion engine vehicles, which means the margins on the VW ID.2 and ID.2X are expected to match those of the Polo and T-Cross. Schwartzer speculates that with smart marketing, the margins on premium EV models — those with dual motors, larger batteries, and longer range — may actually exceed those on comparable gas-powered models. The jury is still out on that subject.
Reaching Price Parity
To buttress his argument, he points out that a premium conventional car today “comes with mechanical all-wheel drive, an automatic gearbox with eight or more speeds, a combustion engine with numerous cylinders and variable valve timing, turbochargers and/or superchargers, plus a multi-stage exhaust after-treatment system that in diesel models even requires an additional tank. A comparably powerful electric drive system is far simpler — and consequently likely to be more profitable.” Assuming battery prices continue to decline, that is. “Sadly, parts of the automotive industry still indulge in self-pity over supposedly low EV profitability. This is an attitude that should be reconsidered,” he writes.
The higher costs for battery cells produced in Europe — even when they come from CATL or BYD — cement China’s dominance, Schwartzer notes. “This has already led to strategic dependence. What happens if the Chinese government decides to invade Taiwan? As a countermeasure, the automotive industry is still called upon to diversify supply chains. Canada, for example, has a lot of potential.
“Nevertheless, the realization remains — it is not that battery cell prices might one day fall significantly. That has already happened and will continue. Prices can fluctuate up or down in the short term, but that changes little in the big picture. Combustion engine cars, on the other hand, are losing competitiveness every single day.” We like how Schwartzer thinks. He is a true hero of the EV revolution!
CATL Claims Sodium Batteries Cost $10 Per kWh
Dan Allard sent me a link last week to a story in Undecided, an online publication whose tag line is “Exploring how technology impacts our lives.” I am not familiar with this publication, so I am a little skeptical about its authenticity or accuracy. Nevertheless, the story says CATL is now claiming its sodium ion batteries — called Naxtra — will eventually cost as little as $10 per kWh. Not only that, the company says they will operate just fine in temperatures as low as -40º C to 70º C ( -40º F to 158º F).
But wait, there’s more! CATL goes on to say its sodium ion batteries will have a useful service life of 10,000 charge/discharge cycles. Whoa, are you sitting down? If all those claims turn out to be accurate, kiss your fossil fuel lifestyle goodbye!
Writing in Undecided, Marr Ferrelll says, “if Naxtra really delivers 10,000 cycles, we’re talking about something like 3.6 million miles of theoretical driving before dropping below 85% capacity. That’s not a car battery anymore. That’s infrastructure. Performance-wise, Naxtra gets surprisingly close to current lithium technology.”
“According to the South China Morning Post, Naxtra achieves an energy density of 175 Wh/kg — remarkably close to the 185 Wh/kg of average EV lithium iron phosphate batteries. Yes, it’s still behind premium nickel-based lithium batteries that hit 250-300 Wh/kg, but it’s competitive with the LFP batteries that already power millions of vehicles. CATL says this translates to a 500 kilometer (310 mile) driving range on a single charge, which covers the vast majority of daily driving needs, especially for urban and suburban use cases where most EVs spend their time.”
Infrastructure
Did you see that part about batteries becoming infrastructure? That’s exciting news. The cheaper batteries get, the more they will kick fossil fuels and nuclear to the curb. Pumped hydro and bio-fuels too. We will finally be able to decarbonize the transportation and energy generation and start disrupting other sectors of the economy and there will be nothing the know-nothings in Washington will be able to do about it.
We caution readers that the claim of $10 per kWh sodium batteries is still just over the next hill. We will be following developments and share them with you as soon as they become available, but we confess to being a little bit exited about putting all the horrendous pollution that comes from extracting, refining, and burning fossil fuels behind us. What a great day in the morning that will be!
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