27 Comments

Summary:

Oil prices and sales of green cars are fundamentally linked, and if last summer was any proof, high oil prices do deliver a boost in sales of fuel efficient and hybrid cars. But that relationship falters if the green car tech is just too expensive. According […]

plug-incargenericOil prices and sales of green cars are fundamentally linked, and if last summer was any proof, high oil prices do deliver a boost in sales of fuel efficient and hybrid cars. But that relationship falters if the green car tech is just too expensive. According to a report from Lux Research, even in a world where oil costs $200 a barrel in 2020 just 4 percent of vehicles sold globally will be electric vehicles and plug-in hybrid electric vehicles because of the high costs of the battery technology.

This forecast reflects a bet that the price of lithium-ion batteries for vehicles will remain pretty high. Lux thinks that lithium-ion cells for vehicles will drop to between $405/kWh and $445/kWh in 2020 from their high of $720/kWh today — not a massive improvement.

The high price of lithium-ion batteries isn’t a shocker to the car markers. Last month Toyota said that after three years of testing, it’s decided lithium-ion technology still isn’t ready for prime time in the regular hybrid (as opposed to plug-in) Prius because the batteries are still too expensive.

The high price of lithium-ion batteries is also one reason why companies are building interesting business models around getting electric vehicles and charging infrastructure deployed. Most notably, Better Place, the electric car charging infrastructure company that is looking to offer low-cost cars to consumers in exchange for a subscription service like a cell phone plan. The head of Better Place Denmark, Jens Moberg, told the UK Guardian that he doesn’t expect industry battery manufacturing costs to drop below €8,000 ($11,440) per battery until after 2012, when higher production volumes could help lower costs. Better Place is working with A123Systems and AESC to develop batteries.

Interestingly, the Lux report suggests that batteries required for hybrid vehicles — and to some extent plug-in hybrid vehicles — are economical enough to be a viable option for consumers by 2020 and will be highly affected by oil prices. A lithium-ion battery in a hybrid or plug-in vehicle is smaller, and cheaper, than that needed for an all-electric vehicle, and many hybrid makers are using cheaper technology like nickel-metal hydride. Lux says plug-in hybrids could sell 3 million units per year by 2020 if the price of oil was at $200 per barrel. Hybrids will sell that many by 2020 regardless of oil prices.

Still, sales of lithium-ion batteries will slowly start to ramp up in the coming years, thanks to the combined sales of plug-in hybrid, hybrid and electric vehicles. But that trend will also depend on oil prices. At $70 per barrel in 2020, sales of li-ion batteries for vehicles will hit $510 million, but with the price of oil at $200 a barrel, the market for li-ion vehicle batteries could skyrocket to $9 billion.

Photo courtesy of Toyota.

You’re subscribed! If you like, you can update your settings

  1. As the latest release of car sales in USA suggests, the current unsustainable oil price topped the gas-powered mobility, on that score, but for “a newcomer” , this fragile recovery world-wide stands more likely to face another great depression.

    Recently, vice chairperson of marketing Bob Lutz indicated that nearly 50,000 consumers have registered at GM’s website, indicating a “strong intention” to buy the plug-in hybrid vehicle,while Bob Kruse, GM’s top electric car exec and Chevy Volt pointman, steps down.

    The auto industry should not forget the bitter lesson from its bankruptcy. Automakers pledged change in direction before people and thereby barely received taxpayer’s cash, but they are still doing nothing. The current “unsustainable” fuel price, which is projected to go even higher, has gone far beyond a hybrid level again , which did not deter the recession.

    The auto industry needs to leverage the rebates of cash for clunkers as a stepping stone for a fundamental change as promised, not business as usual. I still think the densely populated countries are consuming such incredible natural resources right now that inefficiency as it is can’t be allowed any more.

  2. This isn’t even news. Obviously with cars not even available till 2012 or later, trickling in is an understatement. 2010 is just around the corner, but nothing appears to be available still for another couple of years.

  3. “Lux thinks that lithium-ion cells for vehicles will drop to between $405/kWh and $445/kWh in 2020 from their high of $720/kWh today — not a massive improvement.”

    Within the last week Panasonic has announced that by utilizing existing technology and manufacturing facilities of their laptop batteries they can produce battery packs for EVs at half the current price. And that those batteries will be on the market within four years.

    $720 to $360 and by 2013 makes one question Luz.

    (It was also announced that Panasonic are going to be making batteries for Tesla.)

    I wonder if we shouldn’t be factoring in the dislike that many people have for oil companies, the “experience” of gassing up in inclimate weather, and oil changes when we calculate the transition time away from petroleum?

    Then there’s the “fun factor” that people who test drive EVs report.

    There are some behavioral “response cost” factors that aren’t easily transformed to numbers but can play major roles in decision making.

  4. Katie Fehrenbacher Wednesday, October 7, 2009

    @Eletruk, I think its news. A lot of people think there’s gonna be an EV boom coming very soon, and Lux crunched the numbers based on how oil prices would affect that.

  5. But Katie, did they crunch the correct numbers?

    Driving an EV is like paying $1 a gallon for gas with a 35 MPG car. People who don’t do the long term cost of ownership math are going to be comparing what they pay at the pump with what their friends and neighbors don’t pay at the pump as soon as a few EVs hit the streets.

    Do you recall only a few months when fill-ups were $30/$50/$100 a pop? That kind of hurt can drive decision making way past the math.

    Then if Better Place leases EV batteries for under $150 per month and gives unlimited driving for that amount? Now people can buy (a Nissan Leaf, for example) for the same or less (should be less) than a similar ICE car and have a fixed fuel cost for the life of the car. That’s less than $0.15 per mile for the average driver which is the equivalence of $5.25 gas and a 35 MPG car.

    I’m betting we’re back close to $5 a gallon before the Leaf has been long on the market….

  6. Katie Fehrenbacher Wednesday, October 7, 2009

    @Bob, I totally agree with you on that point – Josie wrote an interesting post on helping consumers see the long term cost of ownership here: http://earth2tech.com/2009/10/05/from-mpg-to-epm-plan-for-electricity-per-mile-ratings-takes-hold/

  7. Hi Katie — Could you do an interview/post with Tom or Dick Weir at EESTOR?? They are more available than you think — their responses could very well make the above discussion an extremely moot issue. Thanks Katie

  8. A1 – Did you note the announcement from Zenn Motors that they are abandoning electric car manufacturing?

    They were suppose to be releasing their EEStor powered model this fall (like now).

    I’ve got a feeling EEStor couldn’t deliver….

  9. Electric Cars and Oil – Tesla Motors Club Forum Thursday, October 8, 2009

    [...] Cars and Oil Even With Soaring Oil Prices, Electric Vehicles Will Trickle In [...]

  10. While all the self appointed ‘experts’ crunch their ‘numbers’ on the long term ownership costs of EVs and then like simpletons just compare that to fuel costs of an ICE, NO-ONE EVER tackles to actual cost of long term ownership of ICEs.

    For example, WHY is it the nations entire fleet turns over in only 15 years? One obvious reason… maintenance costs and the inconvenience of ever decreasing periods between essential maintenance on ICE cars, tied to extortionate replacement part costs mean within 15 years everyone decides it’s less costly in time and money to pay for a new car (despite the 30% depression within the 1st year of ownership) then to keep repairing their current vehcile.

    The MAIN reason ICE cars don’t provide much more than a decades worth of reliable motoring is due to heat stress. When you have an engine and transmission that converts 85% of the energy going into it into waste heat, you are going to have components suffer extreme heat fatigue.

    The good news is …. EVs do not suffer anything like the same kind of fatigue because they are much more energy efficient. Industrial electric motors are rated for 20,000 hrs service and routinely see 100,000 hrs trouble free. That’s equal to between 1.2M & 6 Million km before a car needs service!

    The switch from ICE to EV will be similar to the aviation switch from piston to jet, where piston motors needed overhauls every 500 hrs while jets can be inspected after 20,000 hrs and be found to be as-good-as-new.

    BTW the CEO of LG/Compact Power (a REAL authority on the subject) says battery costs will reduce 2-4x over the next 5-10 years. That brings the cell cost of a 16 kWh Chevy Volt battery down to just $1400. Not bad for a decade PLUS worth of trouble free motoring

Comments have been disabled for this post