Electric car price shrinks along with battery cost

Every year, BloombergNEF’s advanced transport team builds a bottom-up analysis of the cost of purchasing an electric vehicle (EV) and compares it to cost of a combustion-engine vehicle of same size. The crossover point — when electric vehicles become cheaper than their combustion-engine equivalents — will be a crucial moment for the EV market. All things being equal, upfront price parity makes a buyer’s decision to buy an EV a matter of taste, style or preference — but not, for much longer, a matter of cost.
Every year, that crossover point gets closer. In 2017, a BloombergNEF analysis forecast that the crossover point was in 2026, nine years out. In 2018, the crossover point was in 2024 — six years out.
The crossover point, per the analysis, is now 2022 for large vehicles in the European Union. For that, we can thank the incredible shrinking electric vehicle battery, which isn’t so much shrinking in size as it is shrinking — dramatically — in cost.
Analysts have for several years been using a sort of shorthand for describing an electric vehicle battery: half the car’s total cost. That figure, and that shorthand, has changed in just a few years. For a midsize US car in 2015, the battery made up more than 57 percent of the total cost. This year, it’s 33 percent.
By 2025, the battery will be only 20 percent of total vehicle cost.
The incredible shrinking electric vehicle battery doesn’t just mean cheaper electric passenger cars. It also means all sorts of other vehicles that weren’t previously practical to electrify now are. One example: Komatsu Ltd. just announced a small all-electric excavator. The company’s rationale is worth reading:
Equipped with an in-house developed new charger, high-voltage converter and other devices, it offers excavation performance on par with the internal combustion model of the same power output, while achieving zero exhaust gas emissions and a dynamic reduction in noise levels.
It is an environment and people-friendly machine.
There are new electric vehicles at sea as well. Stena Line plans to install batteries in one of its car ferries between Sweden and Denmark, rolling out its battery systems incrementally. The first, a 1 megawatt-hour battery, will power the ship when it is maneuvering in port. The next, a 20 megawatt-hour battery, will provide power for port operations and “about 10 nautical miles” beyond. The final, a 50 megawatt-hour battery, will provide 50 nautical miles’ worth of power.
Smaller EV batteries will soon be flying, too. Harbour Air Ltd., which operates 42 planes in 12 short routes in British Columbia, is adding an electric plane to its fleet. “The intent is to eventually convert the entire fleet,” says founder and CEO Greg McDougall, who offers a familiar rationale for his optimism: Ranges and capabilities “are changing very rapidly with the development of the battery technology.”
McDougall’s company is seeking approval for his plans ahead of today’s battery economics in anticipation of what’s coming. “We don’t want to be trying to get through the regulatory process after it becomes more economically viable; we want to do it now,” he says.
—Bloomberg

Nathaniel Bullard is a BloombergNEF energy analyst, covering technology and business model innovation and system-wide resource transitions.