The cost for lithium-ion batteries used in electric-drive vehicles will fall by about a third between now and 2017 as battery-production technology improves, lithium supply increases and battery packs are sold in higher volumes, green-technology research firm Pike Research said in a report released this week.

Lithium-ion battery packs for electric vehicles will fall to an "installed price" of about $523 per kilowatt hour, Pike predicts. Meanwhile, the firm estimates that global revenue from lithium-ion batteries specifically used for transportation will jump to $14.6 billion in 2017, up from $2 billion last year.

"The market for Li-ion batteries will be driven primarily by plug-in hybrid electric vehicles and battery electric vehicles, which require much larger battery packs than hybrids," said John Gartner, research director at Pike Research, in a statement.

Lithium-ion batteries present a classic chicken-or-egg issue with electric-vehicle adoption because battery costs need to decrease in order to yield the lower sticker prices that will entice more shoppers to consider buying EVs and hybrids. Conversely, battery packs need to be produced in high volumes in order to get costs to fall.

Even so, demand for electric-drive vehicles is expected to rise over the next few years as fuel prices increase and automakers offer a wider choice of plug-ins. Pike Research optimistically predicted last year that cumulative global sales of plug-in vehicles will reach 5.2 million units in 2017, up from 114,000 vehicles in 2011.

Estimates of battery costs have varied as automakers and tech analysts have looked into ways to make them less costly. The Nissan Leaf EV's battery pack has been reported to be as cheap as $375 per kilowatt hour, while Tesla Motors CEO Elon Musk said last month that battery costs may fall to less than $200 per kilowatt hour "in the not-too-distant future."
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Prices for Lithium Ion Batteries Will Fall by More Than One-Third by 2017, Helping to Drive EV Adoption

Managing transportation emissions and reducing energy insecurity due to a volatile oil industry are on the top of the agenda of many countries across the world. Electric vehicles (EVs) have a significant role to play in both of those areas, and while EVs will continue to be a niche market through the remainder of this decade, the global automotive industry is beginning to move away from the internal combustion engine and toward electric drivetrains. For auto manufacturers, the key to this shift will be the continual advancement in the capabilities of the vehicles' batteries, which will be led by lithium ion (Li-ion) chemistries. The convergence of the automotive industry toward battery power and the engineering of safe, reliable, and economical Li-ion batteries will slowly reshape the automotive industry as it moves toward electrification. According to a recent report from Pike Research, as manufacturing efficiencies improve and access to lithium expands, the installed cost of Li-ion batteries will fall by more than one-third by the end of 2017.

In terms of revenue, the market for Li-ion batteries for transportation will grow from $2.0 billion annually in 2011 to more than $14.6 billion by 2017, the cleantech market intelligence firm forecasts.

"The market for Li-ion batteries will be driven primarily by plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs), which require much larger battery packs than hybrids," says research director John Gartner. "Battery chemistries that prioritize energy capacity over power density can satisfy both the PHEV and EV battery segments, enabling vendors to offer products to multiple vendors for multiple models. Reducing the installed price of EV batteries to $523 per kilowatt hour in 2017 will be a critical step towards making PEVs cost-competitive with petroleum-powered vehicles."

Although most plug-in electric vehicles today have a range of between 40 and 100 miles, continued concerns over range and the availability of charging infrastructure remain among the biggest impediments to the wider adoption of Li-ion batteries. On the supply side, challenges such as achieving higher energy density, better safety, and greater discharge/charge rates linger despite advances in battery technology. Although a number of Li-ion chemistries are available today, none of them can claim to be the ideal solution. Manufacturers must make tradeoffs in choosing a particular type of Li-ion battery over others.

Pike Research's report, "Electric Vehicle Batteries", outlines the critical role that governments around the globe will play in establishing the electric vehicle market, and the challenges that manufacturers face in creating an industry that will be able to stand on its own as government influence diminishes. The study examines the key market drivers for the electrification of vehicles, the status of R&D in batteries, the impact of declining battery production costs on vehicle sales, and the resale of batteries after their useful life in vehicles. An Executive Summary of the report is available for free download on the firm's website.


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    • 1 Second Ago
  • 38 Comments
      Dan Frederiksen
      • 2 Years Ago
      cell cost will be around 150$/kWh in 2017
      pmpjunkie
      • 2 Years Ago
      The only Pike i'm interested in is in Pikes Peak.
        paulwesterberg
        • 2 Years Ago
        @pmpjunkie
        By 2017 electric vehicles will p0wn pikes peak.
          Spec
          • 2 Years Ago
          @paulwesterberg
          The electrics are doing pretty as is but I wonder if they'll ever dominate. They have to drag big batteries up. And the turbo, I doubt the slight thinning of atmosphere at 14,000 feet makes much of a difference. http://content.usatoday.com/communities/driveon/post/2011/06/electric-car-sets-new-pikes-peak-hill-climb-record/1#.T2UTbREgdws
          DaveMart
          • 2 Years Ago
          @paulwesterberg
          Stick one or two of these babes in and they should MOVE! http://www.yasamotors.com/technology/products/yasa-400 8.25kw/kg peak and 4.25kw/kg continuous is just insane!
          pmpjunkie
          • 2 Years Ago
          @paulwesterberg
          with only 20Km length this should happen much earlier.
          2 Wheeled Menace
          • 2 Years Ago
          @paulwesterberg
          Yeah i actually just had the guy organizing it on the line today and he confirmed the length. Bit thrilled about it, really. I can carry less battery, and run higher power continuously. I can't wait to see what electric madness goes up there on 4 wheels. Electric will *absolutely* dominate. No power loss at 14,000 feet with an electric motor.. ;)
      Spec
      • 2 Years Ago
      Only 1/3 by 2017? I hope we can do a bit better than that.
        Ford Future
        • 2 Years Ago
        @Spec
        I'd be shocked if it didn't fall by 1/2, without a battery tech breakthrough. With one all bets are off.
      Joeviocoe
      • 2 Years Ago
      Pike is the modern corporate version of Nostradamus. Make enough predictions... and a few are bound to stick. Then proceed to count the hits, ignore the misses... and presto! You've got credibility as a psychic/research firm.
      electronx16
      • 2 Years Ago
      $523 *cost* by 2017 yet the Tesla price list indicates $400/KWH *retail* right now...Wonder what's up with that.....
        marcopolo
        • 2 Years Ago
        @electronx16
        @electronx16 You should comment more about battery technology. It seems to be your forte, and you sometimes display considerable understanding of the technology.
        markrogo
        • 2 Years Ago
        @electronx16
        Agree, I made the same point below.
      markrogo
      • 2 Years Ago
      Tesla is already below this number on Model S. Easily.
      EZEE
      • 2 Years Ago
      Not being my normal self, but curious - what is the issue with Pike Research? I know it is like saying 'niagra falla' (slowly I turned, step by step....), but I guess I am new enough that I do. It know their sins. Again, not trying to get people screaming, just curious.
        2 Wheeled Menace
        • 2 Years Ago
        @EZEE
        I forget how long you've been commenting, not sure how long you've been reading either.. Used to be that we'd hear some stupid prediction from pike every other day. It really was obviously often 1 year of data extrapolated 10-20 years.. quite useless! Turns out that this company sells 'full reports' for something like $1000 and ABG was basically doing ads as articles for them when you looked at it close enough. This was when Eric Loveday was doing the 'annoy you with political misinformation' job that Sebastian often does. He would always post the Pike stuff too.
          EZEE
          • 2 Years Ago
          @2 Wheeled Menace
          Sitting at Starbucks, laughing out loud (people think I am nuts). First, of course, the obligatory down vote for me, even though I had 25 disclaimers in my post. Then second on the 'annoy you with political misinformation' part. Thank you very much for the no though. It does explain a lot. Prior to you telling me, I knew that pike ranked up there with Issa, Fuel Cells, and V8 engines as trigger points for tirades. Now I know why. In response to your magic 8 ball comment below - obviously you are right, however I imagine (and I admit, I imagine) that prices would come down, unless there is some sort of supply/manufacturing issue. I just bought a TV for my mom that would have cost $5000 a few years ago, for $599 (her eyes aren't good, so it needs to be a big screen). I would imagine as there are more electrics out there, there will be more competition, and prices should come down. I hope so...
      goodoldgorr
      • 2 Years Ago
      It's because they want subsidies for their gang of crooks, consumers have already rejected this costly solution, look at the leaf and tesla sales.
        Sasparilla Fizz
        • 2 Years Ago
        @goodoldgorr
        Oh, gorr - you know Leaf's sold better in their first year than Prius's....for a vehicle that is as expensive as it is currently, the Leaf is doing great. Tesla orders for their model S are quite good for that level of vehicle.
      Ronald Wolf
      • 2 Years Ago
      So the battery in the next generation Leaf with twice the range will increase in price by a third? Did I do the math correctly?
      brotherkenny4
      • 2 Years Ago
      I'd like to through a bomb and get everyone worked up, but it seems that is completely unnecessary on this topic. The rhetoric is quite intense. I like it. Cost is about $500/kWh at pack level now. What the heck keeps Pike in existence? It certainly isn't accuracy.
      DaveMart
      • 2 Years Ago
      Pike are on a nice little earner. The churn out some magic figures, and they are unchallengeable because you have to pay $1,000 or so to buy the report on which they are based and find out how they were calculated and what the assumptions were. I have little doubt that the report is merely the same process of sticking their finger in the air and guessing. By this process they avoid the normal review process, and whatever bilge they turn out becomes the accepted 'authoritative' figure, much quoted. If this were a proper academic paper they would have to clarify their assumptions and reference their sources, but that is precisely what they wish to avoid. They debase both journalism and the academic process. To specifics, at the present if you look at the leasing prices for Renault batteries then it is clearly based on a price of around $400kwh. There is a bit of give in that, as to some extent Renault may be counting on further price reductions as volume increases, and the depleted batteries have some second life value, but that the pretty much the ball park figure. Those who imagine that the Renault prices are based on some enormous hidden subsidy either from them or the French Government are talking out of their hats, the European car market and Government finances are both having a very tough time at the moment, to the extent that withdrawal by one of the US manufacturers would not surprise me at all, as they are leaking hundreds of millions of dollars a year. As proper, reputable organisations, ie not Pike, estimate, we are rapidly closing in on $300kwh for batteries. That is the DOE, who do clarify their sources and assumptions. Pike's blatherings provide convenient cover for those not wishing to see a rapid advance in electric and hybrid vehicles, and presumably that is why they invented these particular ones.
      spw
      • 2 Years Ago
      I am supporter of EVs and PHEVs... but do you really think cost of battery is $200/kwh? Would Focus EV really cost 39k then? Now of course, it could be semantics... Tesla talking about cost of "uninstalled" price but I very much doubt that price difference is because of other things.
        Dan Frederiksen
        • 2 Years Ago
        @spw
        spw, yes I think lowest cell cost is around 200 now. and the ford, volt and leaf are all massively overpriced. it has nothing to do with battery cost. it is corporate shortsightedness. ford is in no hurry to make EVs succeed. 40 works for them. although remember that they are super douches. it's what they do. coupled with a nice portion of incompetence. nissan itself admitted their pack costs 9k$ and that was years ago and their design is clumsy and overweight. 300kg for 24kWh. hardly impressive
          Spec
          • 2 Years Ago
          @Dan Frederiksen
          " I think lowest cell cost is around 200 now. and the ford, volt and leaf are all massively overpriced." This is conspiracy theory thinking. If it really were that cheap then why wouldn't one of them build that inexpensive car and get all the profitis and glory? Why would they not do that? Why? You can't say incompetence because you are saying EVERYONE is incompetent.
          Ernie Dunbar
          • 2 Years Ago
          @Dan Frederiksen
          Where competition exists in a market, it's pretty much universally true that the lowest price always wins. People might pay more for benefits like "convenience", "comfort" and "quality", but in any mass market, the lowest price sells the most units.
        DaveMart
        • 2 Years Ago
        @spw
        There is no such thing as a standard 'lithium battery' price. There are a whole host of different chemistries with different prices and capabilities. Tesla use the standard 18650 batteries, which they then cleverly wire up for use in an electric car. These batteries are cheap but have a very low power, as opposed to energy, capacity. What that means is that to draw enough power for acceleration you need a big pack, so you wouldn't put these into a Leaf sized pack. In addition they are not good for many cycles. That is OK in a Tesla, as again the big pack means that for any given mileage it does not cycle so often, but does not work for a smaller pack. Prices installed for the very different, higher power, higher cycle life batteries not requiring large numbers to be wired together are at about the $4-500 kwh level as I indicate below. Most other manufacturers haven't got their cost levels so far yet, and are at perhaps $600kwh. All this has nothing to do with the price of the batteries in something like the Toyota Prius plug in, where the 4.2kwh battery has go cycle much more often, and put out a lot more power relative to its weight than for the Leaf, let alone the batteries in something like the Sonata hybrid with its 1.4kwh pack. These batteries are a lot more expensive per kwh.
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