Electric Car battery prices look set to drop by a further 40% in 2017 according to Morgan Stanley, making EVs cost-competitive with ICE cars.
When electric cars first started to reappear in car showrooms, with the Nissan LEAF leading the charge, the huge cost of the batteries to power the EVs meant prices were huge and profits for car makers all but impossible.
But as with any new market, early adopters pay the price, but the perseverance of companies like Nissan and Tesla has seen much wider acceptance of EVs, and the rising scale of battery production – and some technology advances – has seen battery prices drop substantially.
When the Nissan LEAF launched in 2010, batteries for EVs cost in the region of $750 kWh, meaning the battery cost for the LEAF in 2010 would have been around $18k.
Fast forward to late 2016, and the cost per kWh is thought to have dropped as low as $150, meaning the 2016 Nissan LEAF – even with its bigger 30kWh battery – has batteries costing a far more reasonable $4.5k.
A drop in price between 2010 and 2016 of 80% is impressive, and brings very close the point at which EVs are no more, or even less, expensive to produce than ICE cars. And, if Morgan Stanley are right, 2017 could be the tipping point.
According to Morgan Stanley analysts, battery makers in China are planning to reduce their prices by as much as 40 per cent in 2017 (and still be profitable), which means we could see battery costs dropping below the $100 per kWh level, a price which would make EVs a really strong contender.
Whilst great news for buyers of EVs, it’s perhaps not so good for car makers who’ve jumped in to EVs very early and, like Nissan and Tesla, developed their own battery production.
Tesla is about ready to open its Gigafactory to produce batteries for its cars, but if the Morgan Stanley story is right it will be costing them more to produce than they could buy them for.
And Carlos Ghosn – Nissan boss – said before Christmas that producing their own batteries is probably no longer viable as outside suppliers can do it cheaper and better. Which probably doesn’t auger well for Nissan’s battery plant in Sunderland.
The world is changing, and EVs are clearly about to become properly mainstream.
But until battery technology advances to allow for much smaller, far more dense batteries which can be charged in just minutes, there will still be a big place for ICE cars