The experience curve for Li-Ion EV batteries shows a rapid rate of price reduction. There are some pretty optimistic numbers coming out from analysts for the cost of Lithium Ion batteries in the not to distant future. It is looking likely that they will drop from today’s $500+ / kwhr to below $200 / kwhr by 2020 and $160 / kwhr by 2025. Using the experience curve in the link above, assuming a 30% annual growth rate for EVs, adjusting for more recent battery cost data data and then using the less steep learning curve associated with consumer electronics, we come up with $100 / kwhr by 2029 and $50 / kwhr by 2034. McKinsey, Navigant and Elon Musk’s projections get us to the $160 / kwhr and I have done the additional extrapolations.
UPDATE July 2014: Nissan has introduced replacement battery packs for $270 / kWhr suggesting that the more aggressive projections by Navigant are on target.*
Further cost reductions may be achieved through repurposing the batteries after they are depleted and their capacity to weight ratio is insufficient for transportation. See this link for post vehicular grid storage. This may also end up being a real problem for the flow battery folks. Even though their solution may be better, this may give Lithium Ion and its successor technologies the edge through scale and learning curve benefits.
* Near term Nissan is taking a loss. However there is currently little demand for replacement batteries. It is a near certainty that they have priced this so that when demand becomes substantial it will be break-even or profitable.
Bloomberg Presentation on cost reduction and technology improvement
EPRI Li-ion battery study – From 2009 but useful
battery cost curves, battery costs, EV Cost reduction, battery cost reduction, batteries