Are We on the Verge of Significant Savings for Electric Vehicles?

Are we on the verge of significant savings for electric vehicles?
Are we on the verge of significant savings for electric vehicles?

For the last couple of years, experts have promised us that the cost of electric vehicles would fall as the cost of technology decreases, but so far we have seen very little evidence of this. In some ways this has put off potential buyers in the short-term - although if groups such as the Vancouver Electric Vehicle Association are correct we could be on the verge of a major reduction in the cost of electric vehicles. So what is happening and why should we expect the cost of electric vehicles to fall?

The simple fact is that the most expensive component of any electric vehicle, i.e. the battery pack, is due to fall in price. When will this happen? What kind of price reductions can we expect?

Imminent cost cuts

While the Vancouver Electric Vehicle Association is a prominent figure in the Canadian electric vehicle market, it is the lithium ion battery manufacturers who will eventually decide when prices fall. Against this background, it was interesting to see that LG Chem Power (a major lithium ion battery manufacturer) announced plans to halve the cost of batteries for both plug-in electric vehicles and hybrids. This announcement was made in autumn 2013 and many experts believe we are on the verge of the next big chapter for EVs.

Quote from ElectricForum.com : "In what could turn out to be one of the major battery technology events of the last 100 years, Stanford University has announced the creation of the first self-healing battery."

It is estimated that the replacement cost of battery packs in a standard electric vehicle is around $3000 and these need to be replaced every 3 to 5 years. Even though the cost of purchasing, maintaining and running an electric vehicle compares very favourably to gasoline and diesel vehicles, it can be a major shock to be hit with a $3000 battery replacement bill every 3 to 5 years!

Will this make a difference?

Aside from the fact that the cost of lithium ion batteries used in plug-in and hybrid electric vehicles are set to fall, there have been significant developments with regards to the underlying technology. So in effect we will see a reduction in the cost of lithium ion batteries while at the same time there will be an extension of their journey capacity. When you also take into account the fact that electric vehicles are lighter than ever and often use alternative power sources such as solar to replenish resources, this will potentially make an enormous difference.

The development of the lithium ion battery has in the eyes of many been extended further than even the most optimistic had forecast but there still appears to be more to come. There is also an array of other alternative battery sources being tested at this moment in time which have the potential to significantly extend current journey capacity. The new Kia EV is expected to offer journey capacity up to 200 km per full battery charge, although even this may seem on the light side once new battery technology is made available to the wider public.

Conclusion

The fact that one of the major lithium ion battery manufacturers in the world expects to half the price of electric vehicle batteries in the short-term is a major step forward. Savings from the cost of battery technology can immediately be handed back to consumers in the shape of cheaper electric vehicles. When you also take into account the array of new battery technology undergoing testing at this moment in time, perhaps we are on the verge of a game changing development for the electric vehicle market?