Improved battery design is key to cost savings

The team from Carnegie Mellon University, including a post-doctoral research associate from MIT, analysed the design and production of vehicle batteries in a study appearing in the Journal of Power Sources and reported that mass production has limitations when bringing down costs.

‘Electric vehicle batteries are expensive,’ said CMU’s Jeremy Michalek, Professor of Engineering and Public Policy and Mechanical Engineering. ‘Federal and state governments have been subsidising and mandating electric vehicle sales for years with the idea that increasing production volume will reduce costs and make these vehicles viable for mainstream consumers.’

Tesla’s planned Gigafactory has similar ambitions, promising major cost reductions at higher volume.

‘But we found that battery economies of scale are exhausted quickly, at around 200-300MWh of annual production. That’s comparable to the amount of batteries produced for the Nissan Leaf or the Chevy Volt last year,’ Michalek said in a statement. ‘Past this point, higher volume alone won’t do much to cut cost.’

Economies of scale are defined as the cost savings that arise from spreading the cost of expensive equipment, facilities and other investments over a large number of units produced, reducing the cost for each unit.

Prominent lawmakers, such as Senate majority leader Harry Reid, as well as President Barack Obama have called for increased tax incentives for electric vehicle sales.

‘Our results raise questions about whether increasing vehicle sales is the best way to continue to spend limited resources — as opposed to, say, more research on battery technology,’ said Jay Whitacre, Associate Professor of Engineering and Public Policy and Materials Science. ‘For example, we estimate that finding a way to make batteries with thicker electrodes could lower the cost of long-range electric vehicle batteries by as much as eight per cent, while increasing production beyond current levels may only cut costs by less than three per cent.’

Whitacre said that other cost-cutting factors could be indirectly aided by higher production volume, such as the firm’s learning and experience with battery manufacturing, increased incentives for corporate research on electric vehicle technologies, and potential for increased control over suppliers that provide raw materials.

The study also noted that battery cost varies for different vehicle applications.

‘Vehicle batteries aren’t commodities,’ said Apurba Sakti, a postdoctoral research associate at MIT. ‘Different battery designs are best for different types of vehicles. A battery designed for one application can cost more than twice as much per unit energy as one designed for another application.’

Low-cost batteries are essential to increasing the number of electric vehicles on the road, the team said.

‘At the end of the day, economics will determine the degree to which electric vehicles are adopted by mainstream consumers,’ Michalek said. ‘Battery cost is the single largest economic barrier for mainstream adoption of electric vehicles, and large factories alone aren’t likely to solve the battery cost problem.’

The CMU/MIT paper titled ’A techno-economic analysis and optimisation of Li-ion batteries for light-duty passenger vehicle electrification’ can be found here.