Transport Theory

EV battery prices could fall up to 70 percent by 2025

Posting in Energy

A new report from McKinsey & Co. shows promising signs for the electric vehicle market.

Currently, one of the main factors keeping the price of electric vehicles high - and out of range for buyers on a budget - is the cost of the lithium ion batteries that power them.

But a new report from McKinsey & Co. predicts up to a 70 percent drop in the price of these batteries over the next decade, a development that could make waves for the electric power and petroleum industries, not to mention the auto industry.

According to the study, the price of automotive battery packs could fall from $500-$600 per kilowatt hour today to around $200 by 2020 and $160 by 2025, thanks to economies of scale, a fall in component prices, and simply extensions in battery life. The McKinsey Quarterly bulletin suggests that once batteries cost less than $250/kWh, the zero-emissions cars they power could be priced competitively with conventional gasoline-powered cars, assuming that gas costs $3.50 a gallon in the U.S.

"Given the path to substantially lower battery prices, which are now coming into view, executives should be considering bold actions to capitalize on one of the biggest disruptions facing the transportation, power and petroleum sectors over the next decade or more," the report said.

Of course, cost and battery life are not the only factors affecting the adoption of electric vehicles. Other concerns, including regulations, overall performance, and any improvement cheaper batteries may have on the performance of conventional automobiles. But nevertheless, the prospect of cheaper batteries may cause some companies to shift resources and invest in the development of electric vehicles.

Readers, at what range and price would you consider switching from a gas-powered or hybrid car to an all-electric vehicle? When, if ever, do you think electric cars will enter the mainstream for prospective car buyers?

Photo: Nissan

via [AOL Energy]

Channtal Fleischfresser

Contributing Editor

Contributing Editor Channtal Fleischfresser has worked for The Economist, WNET/Channel 13, Al Jazeera English, Wall Street Journal and Associated Press. She holds degrees from the University of Pennsylvania and the Columbia University Graduate School of Journalism. She is based in New York. Follow her on Twitter. Disclosure