Electric-Car Battery Costs Fell 8 Percent A Year For Market Leaders: StudyElectric-Car Battery Costs Fell 8 Percent A Year For Market Leaders: Study

Five years into the era of modern electric cars, the biggest cost remains the battery pack.
Now there’s data to confirm that not only are the costs of the battery cells falling, but that they are falling at rates pretty much in line with historical declines.
A study published last month not only suggested that battery costs have already fallen below those predicted for 2020, but actually estimated the rate of decline.
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According to the new study, published in the Climate Change section of Nature, costs fell 14 percent a year from 2007 through 2014.
More importantly, for the “market-leading firms”–such as Nissan and Tesla–the decline has occurred at a rate of about 8 percent a year, bringing today’s cost to less than $300 per kilowatt-hour.
Tesla Model S lithium-ion battery pack in rolling chassis [photo: Martin Gillet via Flickr]
The study uses data from 85 cost estimates published in peer-reviewed academic journals, supplemented by reports from the battery and car manufacturers themselves, industry analysts, and the media.
The caveat, as the authors note, is that battery and car companies virtually never disclose their actual cell costs, so the survey–while including many data sources–is necessarily somewhat incomplete.
“Learning rate, the cost reduction following a cumulative doubling of production,” say the authors in their summary, “is found to be between 6 and 9 percent, in line with earlier studies on vehicle battery technology.”
ALSO SEE: How Much And How Fast Will Electric-Car Battery Costs Fall? (Mar 2012)
Over more than 20 years of small lithium-ion cell production for consumer electronics, the annual improvement in cost-performance has been about 7 percent.
The decline isn’t linear, but comes as a series of “stair steps” as new cell chemistries, improved production processes, and economies of scale all drive down costs incrementally.
Volt Battery Pack
Battery specialists at both cell manufacturers and automakers have long indicated that the large-format lithium-ion cells used by all automakers other than Tesla should follow a similar curve.
Tesla Motors takes a different path: It wires together thousands of simplified small-format cells, adapted from the same design as the “commodity cells” in consumer electronics, to make the battery packs in its Model S electric luxury sedan.
That is widely thought to give it the lowest per-kWh pack cost in the industry.
With the exception of Volkswagen Group, other makers have thus far shied away from the additional expenses associated with interconnecting thousands of small cells rather than the hundreds of larger cells used by BMW, General Motors, Nissan, and other plug-in car makers.
Either way, however, the new study appears to confirm that the rate of cost decline for automotive lithium-ion cells should follow the historic curve for consumer cells.
AESC lithium-ion cell
Meanwhile, the cost of conventional gasoline vehicles has been projected by the U.S. National Highway Transportation Safety Administration to increase about $3,000 in real dollars from 2012 to 2025 to meet increasingly stringent corporate average fuel-economy standards.
With gasoline cars getting pricier, and battery costs falling, the higher manufacturing and purchase prices of plug-in electric cars will likely dwindle toward parity over the next decade.
Which leads to some interesting scenarios for the mix of powertrain sales starting in the 2018 to 2020 window.
[hat tip: Hugh Crawford]
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