Li_Ion at $270 / kWhr EV Tipping Point May Be Closer Than The Analysts Think

Nissan has just announced that they will provide replacement batteries for their Leaf cars for $6500 = $5500 after trade-in for your old battery pack.  This puts Li-Ion battery packsat about $270 / kWhr.  That is well within the range where analysts expect EVs to break out and go mainstream.  At this time this is a leading indicator, it is very encouraging.

Li-Ion battery Improvement Curve

Cost per kWhr = $6500 / 24 kWhr = $270

This adds credibility to a number of recent studies and prognostications suggesting that Li-Ion battery prices will drop rapidly to $200 / kWhr or less by 2020.  The rapid drop in automotive Li-ion battery prices will flatten as they become comparable to consumer electronics Li-ion batteries.  However the EV market will continue to ramp volume and drive down the cost of Li-Ion along the consumer battery experience curve, or close to it.

While the current Leaf replacement price is a money loser for the company, they also are on record saying that there have been no takers.  In other words, the batteries are holding up quite well.  No doubt they knew this and priced it for profitability when a large number of the batteries do degrade to the point of needing replacement, probably in the 1 – 3 year time frame.  In other words they are willing to take small losses at the beginning of the replacement program in order to provide peace of mind for Leaf customers and drive sales.

Kuhlman explains that Nissan is subsidizing the replacement packs as “a ‘customer-first’ initiative” after much discussion of the need for a transparent replacement price–which the company “hear loud and clear from [Leaf] owners and lessors.”

All that said, however, after the first month, “we have yet to sell one battery as part of the program.”

Since the studies mentioned above Tesla has announced their plans for a Giga factory which will double world production from 2013 levels.  Recently, Elon Musk was quoted  saying “We’re probably going to do two or maybe three states all the way to creating a foundation and completing the plans and getting approvals and everything”.  It does not take a clarivoiant to read the tea leaves and deduce that Tesla is positioning themselves to open multiple giga factories by 2020.  Not only does this suggest that EV’s will reach the tipping point before 2020, it also has pleasant ramifications for laptop price / performance since the same Li-ion improvements can pass through to that and many other applications.

 

Leaf, Tesla, Electric Vehicle, lithium ion, cost reduction, HEV, PHEV, EV, Elon Musk, Nissan

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6 Responses to Li_Ion at $270 / kWhr EV Tipping Point May Be Closer Than The Analysts Think

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