Don’t expect electric cars and trucks to get as cheap as their gas-powered rivals anytime soon.

A new report from the MIT Energy Initiative warns that EVs may never reach the same sticker price so long as they rely on lithium-ion batteries, the energy storage technology that powers most of today’s consumer electronics. In fact, it’s likely to take another decade just to eliminate the difference in the lifetime costs between the vehicle categories, which factors in the higher fuel and maintenance expenses of standard cars and trucks.

The findings sharply contradict those of other research groups, which have concluded that electric vehicles could achieve price parity with gas-powered ones in the next five years. The lingering price difference predicted by the MIT report could stunt the transition to lower-emission vehicles, requiring governments to extend subsides or enact stricter mandates to achieve the same adoption of EVs and cuts in climate pollution.

Transportation is the largest source of greenhouse-gas emissions in the US and fourth largest globally, so there’s no way to achieve the reductions necessary to avoid dangerous levels of global warming without major shifts to cleaner vehicles and mass transit systems.

The problem is that the steady decline in the cost of lithium-ion batteries, which power electric vehicles and account for about a third of their total cost, is likely to slow in the next few years as they approach limits set by the cost of raw materials.

“If you follow some of these other projections, you basically end up with the cost of batteries being less than the ingredients required to make it,” says Randall Field, executive director of the Mobility of the Future group at MIT. “We see that as a flaw.”

The numbers

Current lithium-ion battery packs are estimated to cost from around $175 to $300 per kilowatt-hour. (A typical midrange EV has a 60/kWh battery pack.)

A number of commercial and academic researchers have projected that the costs of such batteries will reach $100/kWh by 2025 or before, which many proclaim is the “magic number” where EVs and gas-fueled vehicles reach retail price parity without subsidies. And they would continue to fall from there.

But reaching the $100 threshold by 2030 would require material costs to remain flat for the next decade, during a period when global demand for lithium-ion batteries is expected to rise sharply, the MIT reports notes. It projects that costs will likely fall only to $124 per kilowatt-hour by then. At that point, the “total cost of ownership” between the categories would be about the same, given the additional fuel and maintenance costs of gas-fueled vehicles. (Where these lines cross precisely depends heavily on local fuel costs, among other factors.)

But the sticker price of an EV with 200 miles of range would still run thousands of dollars more than a comparable gas-fueled vehicle in many areas. While closing the gap on total cost of ownership would be a solid step for electric vehicles, the average consumer is very sensitive to the upfront price tag—and what it equates to in monthly payments.

Costs are likely to continue to improve as, among other things, companies reduce the level of pricey cobalt in battery components and achieve manufacturing improvements as production volumes rise. But metals mining is already a mature process, so further declines there are likely to slow rapidly after 2025 as the cost of materials makes up a larger and larger portion of the total cost, the report finds.

Deeper cost declines beyond 2030 are likely to require shifts from the dominant lithium-ion chemistry today to entirely different technologies, like lithium-metal, solid-state and lithium-sulfur batteries. Each of these are still in much earlier development stages, so it’s questionable whether any will be able to displace lithium-ion by 2030, Field says.

Gene Berdichevsky, chief executive of anode materials maker Sila Nanotechnologies, agrees it will be hard for the industry to consistently break through the $100/kWh floor with current technology.

But he also thinks the paper discounts some of the nearer-term improvements we’ll see in lithium-ion batteries without full-fledged shifts to different chemistries. By 2030, Berdichevsky expects, battery packs will be able to store significantly more energy and last many more miles on the road, which can cut costs, improve performance, and otherwise boost the relative appeal of EVs.

Driving forward

The good news is a growing number of manufacturers around the world are moving into EVs, rolling out different models at different price points.

On Sunday, Ford unveiled an electric SUV set to hit showrooms next year, dubbed the Mustang Mach E. Audi, Jaguar, Mercedes-Benz, and Tesla have all introduced battery-powered SUVs as well, catering to consumers’ tastes for larger vehicles.

But the MIT study notes that achieving deep reductions in transportation emissions will require a parallel overhaul of the electricity systems used to charge EVs.

Currently, US carbon emissions per mile for a battery electric vehicle are on average only about 45% less than those from a gas-fueled vehicle of comparable size. That’s because fossil fuels still generate the dominant share of electricity in most markets, and the manufacturing process for EVs generates considerably higher emissions, mainly related to the battery production.

EVs in some US regions, notably including coal states like West Virginia, could generate nearly the same level of emissions as standard vehicles over their lives. In parts of India and China with particularly dirty electricity systems, EVs may even generate more emissions than gas-fueled vehicles, says Emre Gencer, a research scientist who worked on the study.

If EVs can’t compete directly on price in the marketplace, public policy will need to play a larger role in driving EV adoption and cutting transportation emissions.

The MIT study projects that the share of electric vehicles and plug-in hybrids will rise in any scenario, reaching 33% of the global vehicle fleet by 2050 as prices slowly decline, even with no additional climate polices. But a strong set of additional regulations, including a global carbon tax set high enough to prevent 2 ˚C of warming, would push that figure to 50% by midcentury.

That would add up to hundreds of millions of additional low-emission vehicles on the roads, and prevent 1.5 billion metric tons of carbon dioxide from reaching the atmosphere.



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