Many people expect the Internal Combustion Engine (ICE) to disappear over the next decade, and be replaced with battery powered vehicles (BEVs).
But could the opposite be true?
Perhaps BEVs will disappear.
Table 1 shows the basic estimated cost information at the heart of BEVs.
Table 1
|
Cost per battery based on kWh capacity |
||||
|
Battery cost |
Size in kWh >> |
85 |
70 |
60 |
|
$260 |
/kWh |
$22,100 |
$18,200 |
$15,600 |
|
$200 |
/kWh |
$17,000 |
$14,000 |
$12,000 |
|
$125 |
/kWh |
$10,625 |
$8,750 |
$7,500 |
The current Tesla battery cost is estimated at $260/kWh.
The probable cost after completion of the Gigafactory in 2018 is around $200/kWh.
The battery cost the Department of Energy (DOE) has established for BEVs to be competitive with ICE vehicles is $125/kWh.
The cost of an ICE engine is around $5,000, and this would be avoided in a BEV. When the savings in fuel costs are added, the DOE estimate seems reasonable for small BEVs.
However, the only technology on the horizon that might be able to achieve the DOE requirement is the solid state Lithium battery, which is not likely to be available before the mid 2020s. It’s currently in the laboratory stage and may never achieve the $125/kWh goal.
This means a competitive BEV won’t be available for at least a decade, if then.
The Tesla model 70D is priced at around $83,000, using the 85 kWh battery.
With completion of the Gigafactory in 2018, the cost of the battery should be reduced to $200/kWh, and the price of the 70D lowered to the mid $70,000.
This is still a car for the rich and famous.
Tesla proposes to produce a Model 3 for $35,000, with a range of 200+ miles. This will likely require a 70 kWh battery, with a cost of around $14,000, based on future Gigafactory costs. See Table 1.
This will still result in a price premium, over an ICE vehicle, of around $7,000.
For the next decade, buyers will have to be willing to pay a $7,000 premium to buy a Model 3 type BEV.
BEV offerings from other manufacturers are likely to be similar.
Of course, this higher cost can be offset by government subsidies. But why continue to use taxpayer money to subsidize BEVs?
In the meantime, the ICE engine will be improved, which will improve gasoline mileage, lower the weight of the engine, and result in a smaller price tag for the engine. Improvements can be achieved by using plastic materials, special steels for pistons and liners, and new ceramic materials, similar to those being used in jet engines.
As a result, the ICE engine is likely to get better and be less costly, which could increase the BEV price premium.
While these are merely estimates, they reflect an objective look at the likely cost of batteries during the next decade.
BEVs are going to cost several thousand dollars more than comparable family sized vehicles. The rich and famous will continue to buy the luxury versions and take advantage of taxpayers who will subsidize their cars.
But initial cost is only part of the equation.
Buyers of BEVs will also have to contend with having to replace batteries, at a cost of around $14,000. If initial owners sell their BEV, there will be additional depreciation due to the high cost of replacement batteries.
An ICE vehicle will continue to be able to go 400 miles between fuelings, while owners of BEVs will still need to contend with range anxiety.
And why are we spending multiple billions of dollars in subsidies, all of which comes from the income of ordinary Americans, to pursue the adoption of an expensive product that most people may not be willing to buy?
It’s not to have the United States become energy independent, because, with fracking, the United States is already becoming energy independent.
It’s to cut CO2 emissions.
But this is a bogus objective, because 66% of the electricity used to charge batteries comes form power plants that emit CO2. There is little likelihood that the percentage of electricity coming from power plants using fossil fuels will be significantly reduced, especially as nuclear power plants begin to be shut down in the mid 2030s. See, U.S. Nuclear Demise Amid Increases Elsewhere
Using BEVs will not lower CO2 emissions.
Led by California, several states are perpetuating this bogus objective by mandating that 15% of vehicles sold in their states be zero-emission vehicles by 2025. In 2014 BEVs represented 0.7 percent of cars sold in the United States, which is less than one percent.
It’s unlikely that solid state Lithium batteries will change the financial equation before the mid 2020s, if ever. If they do, the Gigafactory will be a white elephant unless its output can be sold elsewhere. See, Is Tesla Gigafactory a Bad Investment?
In a twist of fate, the ICE could be powering vehicles for many decades, while the BEV faces near extinction and becomes a mere toy for the rich and famous.
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