Electric cars are growing in popularity, but high prices remain a significant barrier to widespread adoption. Bringing down costs is essential to get more people into EVs.
So, what will it take to make an EV affordable for the masses?
Truth be told, we already have some pretty affordable electric cars when comparing new classes. The MG4, for example, is cheaper than a Golf, and used electric car prices are falling, with the likes of the Honda e and Tesla Model 3 being more tempting than ever.
But new EV prices still need to fall. Here’s how they will do just that:
The Lithium-Ion Battery is Key
The battery pack is the most expensive part of an EV. According to Andy Palmer, former Nissan COO, battery costs have fallen from around $1,000 per kWh when the Leaf launched to around $150 per kWh today. For a 60 kWh battery, the cost to an automaker is around $9,000. With overheads and dealer margin, that adds $15,000 to the car’s cost. Further reductions to around $80 per kWh are expected, but the rate of decline is slowing.
Smaller Batteries Would Reduce Costs
Fitting a smaller 24 kWh battery at $150 per kWh could put an EV on the market for around $20,000. But this requires readily available public charging infrastructure so drivers aren’t anxious about range.
A robust charging network with 15 million points would give drivers confidence in smaller batteries. Ubiquitous charging will transform perceptions around range and enable the transition to EVs with reduced range. For most daily suburban trips of less than 100 miles, a 150 mile range EV should suffice.
Battery Chemistry Improvements
Electric vehicle batteries are improving with emerging technologies like lithium iron phosphate (LFP) batteries are cheaper than nickel manganese cobalt (NMC). Sodium ion and solid state batteries offer potential cost reductions in the future, but aren’t yet ready for mass production. Improvements in battery cooling and integration can boost efficiency and allow downsizing.
Sodium-ion batteries use abundant, low-cost sodium instead of scarce lithium. This makes the materials cheaper, though energy density is lower. CATL plans to bring sodium-ion batteries to market in 2023, which could reduce costs 15-20%.
Solid state batteries replace the liquid electrolyte with a solid material, enabling higher energy density and safety. High manufacturing costs remain a barrier, but could come down with process improvements. Nissan aims to launch solid state batteries by 2028.
Meanwhile, lithium-ion improvements are also coming. One is the addition of graphene, an advanced carbon material, to the anode. Graphene enhances conductivity and stability, yielding faster charging and longer life. SK Innovation aims to use graphene batteries in Hyundai vehicles in 2025.
Lower Total Cost of Ownership
For owners who use the full range, EVs offer lower total ownership costs than petrol cars thanks to reduced energy and maintenance costs. But consumers must choose a battery size suited to their needs, or pay extra upfront for unnecessary range.
Infrastructure Investment Lowers Costs
With ubiquitous fast charging, consumers would worry less about range and accept smaller batteries. The link between charging infrastructure and vehicle cost is direct. If average range needs fall from 300 to 150 miles.
One crucial way to reduce EV costs is through simpler design. Up until now, EV batteries have consisted of large numbers of small battery cells manufactured into modules. These modules are then assembled into complex, bespoke battery packs tailored to each vehicle.
For example, one automaker might make 3 module designs, and use them to create 8 unique pack configurations to get economies of scale on the modules. But as production volumes increase, the benefits of scale at the module level diminish.
The emerging “cell-to-vehicle” strategy skips modules and puts battery cells directly into cars. This means designing larger battery cells customized for each vehicle. Instead of thousands of small commodity cells, there would be hundreds of larger bespoke cells per car.
The large cell approach reduces the layers of packaging required in a battery pack. And since there are fewer unique components to manufacture, assemble, and manage, costs are lower.
Volkswagen’s new Trinity EV is expected to adopt this large cell strategy. VW says cell-to-vehicle will reduce battery costs 30% compared to its current modular design. It requires close collaboration with cell suppliers to co-design batteries tailored for each car.
The cell-to-vehicle approach represents a fundamental shift in battery design. Along with other improvements like integrated cooling, it can significantly cut complexity and costs. Simpler designs enabled by custom large cells will be key to affordable EVs.
Rethink Car Ownership
Along with technical advances, our relationship with cars may need to evolve. New ownership models like subscriptions and sharing could reduce reliance on large batteries. With easy access to shared EVs, range anxiety diminishes.
For example, salary sacrifice schemes are a fantastic way to get a brand-new electric car cheaper than you could on a standard PCP.
Make EVs More Desirable
Regulations, incentives and disincentives for petrol cars will nudge people towards EVs. But positive marketing is vital. EVs must become aspirational through stunning design and emphasis on benefits like acceleration, technology and sustainability.
Overall, affordable EVs require a combination of better batteries, infrastructure, design, and changing attitudes. There is no single solution. But with sustained effort on multiple fronts, the dream of an electric car for the masses can become reality.