Can Battery-Powered Vehicles Compete?

Can Battery-Powered Vehicles Compete?

My April 26 article showed that the best all-around vehicle was the ICE, and that a plug-in hybrid was a viable alternative, but that battery powered vehicles (BEVs) just didn’t add up.

It referenced another article showing that the cost of lithium-ion batteries would have to fall to $80 per kWh, from around $130 per kWH today, before BEVs would be competitive with ICE vehicles. (See below for link to article.)

The relative advantages or disadvantages of the three vehicle types are itemized here:

  1. ICE vehicles have the following benefits:
  • Low initial cost
  • No range anxiety
  • No fueling concerns regarding time to fuel or fuel availability
  • Operate for 12,000 miles with only routine maintenance
  • No need to replace the power train after 8,000 miles
  1. Plug-in hybrids have the added advantage of saving gasoline when average daily mileage is under 50 miles.
  2. BEVs are burdened by:
  • High initial cost. 
  • Range anxiety
  • Long fueling times. (Minimum 30 minutes, possibly hours.)
  • Cost of replacing expensive lithium-ion battery pack after 8,000, possibly 10,000 miles. 
  • Battery replacement also affects resale and trade-in value.

BEVs have two advantages:

  • Quiet operation
  • Fast acceleration

Political and market forces

BEVs are being promoted by the government to eliminate the use of fossil fuels.

This is being done without considering national security implications from becoming dependent on China and other countries for the materials used in batteries.

It will also incur huge costs to increase generation, transmission and distribution capacity of the electric grid, with no assurance that so-called clean generation can successfully eliminate CO2 emissions from power plants.

BEVs now face another obstacle that could preclude their replacing ICE vehicles.

The increasing cost of materials will prevent BEVs from becoming price competitive with ICE vehicles.

As noted above, the cost of lithium-ion batteries must fall to $80 per kWh before BEVs are competitive with ICE vehicles. Now, it’s very likely that the cost of batteries will increase, not fall.

Goldman Sachs has predicted that, while prices of key material will rise substantially and spike in 2022 due to a lack of supply, they will mostly merely double in 2024 as new mines come into operation.

But, a doubling of material costs will mean that the cost of lithium-ion batteries will increase … not decrease.

According to Goldman Sachs, the increased cost of Lithium, Nickel and Cobalt will result in an 18% increase in the cost of lithium-ion batteries. This would increase the cost of batteries from $130, to over $150 per kWh hour.

Higher battery cost will impede adoption of BEVs and, depending on future material costs, could prevent BEVs from ever replacing ICE vehicles in a free market.

Goldman Sachs forecast a battery price of $123 per kWh in 2025 as the result of manufacturing cost improvements, but this is still higher than the price needed for BEVs to be cost competitive with ICE vehicles.

While gasoline prices are currently high, they are likely to fall with increased supplies of oil. Even if the price of gasoline was to remain higher than in the past, BEVs would still have to overcome negative concerns about range etc,

The major US automobile companies, i.e., GM, Ford and Chrysler, may be making a huge mistake by investing so much money in battery and BEV factories.

These are “bet your company” sized investments that will be unsustainable if BEVs become merely a niche market … which is entirely possible as the cost of BEVs increases.

Plug-in hybrids, a logical alternative to BEVs, are largely being ignored by America’s big three automobile manufacturers.

Only Toyota has promoted plug-in hybrid vehicles over the past several years, even though the Japanese government established net-zero carbon goals. However, Japanese industrial strategy has always been uniform, which explains why Toyota recently announced support for BEV models.

Cost wise, plug-in hybrids would seem to be the best all-around choice for the family car.

Conclusion

The government’s hysterical response to climate change and its efforts to force the adoption of BEVs, combined with the car companies acquiescing to government dictates, could bode ill for America’s automobile industry.

There has been talk about stranded investment in the fossil fuel industry, but there is now the specter of stranded mis-investment by the automobile industry. Investments that will never be recovered.

ICE vehicles have been the preferred choice of the average American consumer. Only the rich and famous, and car aficionados have been enthusiastic about BEVs.

If BEV prices increase, which is now happening, ICE vehicles will continue to be bought by the average American in a free market.

Battery powered vehicles (BEVs) just don’t add up.

Link to April 26 article: https://bit.ly/3MO4aXN

Let others know about this article by using this link in an email https://bit.ly/3RDXOfB

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10 Replies to “Can Battery-Powered Vehicles Compete?”

  1. BEVs don’t have to compete. NYS, California, several European countries, and soon others, have outlawed the sale of ICE cars after 2030-2035. Since ICE cars have no future we can expect to see ICE-supporting infrastructure begin to collapse well before 2035.

    Have you ever seen pictures of modern day Havana? Since they haven’t been able to import new cars since the Cuban revolution they are still driving 60 year and older American cars, somehow still patched together. Coming soon to a city near you.

    • In our small central California town, EVs are very popular. Our street has 16 homes. As residents purchased EVs and added the charging stations in their garages, the old transformers (there are 3 of them) began to blow, knocking out power to sections of homes along the street. The SoCalEdison repair team said this was happening all over town as residents add EVs to their fleet. The old electrical structure simply can’t keep up with the increase in electrical use of an average residence. New home construction in California must now be electric (gas is prohibited in new home construction). That’s more insanity from California legislators given our overburdened and outdated electrical grid.

      Thank you for presenting the obvious about EVs.

      Cate (Santa Barbara, Ca.)

      • Thanks. I’m not surprised that distribution transformers are failing with the addition of BEVs.
        I’ve published articles on this issue on several occasions.
        Very few utilities know whether their distribution transformers are over loaded. Eighty years ago, DTs had overload lights but they were done away with to save money. I was in the marketing and manufacturing of distribution transformers at the time so I have first hand experience with them.
        Not only are DTs being overloaded and failing, but sooner or later the substation transformer feeding the DTs will also become overloaded and fail. When a substation transformer fails it can cost a million dollars or more to replace it.
        In short, the grid is not ready for BEVs

  2. Thanks Donn,
    You are Blessed with many good traits. Among them, Common Sense, Great Technical Knowledge, Terrific Writing Skills and of course, deep knowledge of energy and engineering. Thank you for sharing! As I read your post I remembered another energy expert’s comments of the last week or so. It went something like this: “In 1982 America was fueled by 82% Fossil Fuels, in 2022 America is fueled by 81% Fossil Fuels, after Billions and Billions have been spent on wind and solar, we changed the amount of fossil fuel consumption by 1%”. Also, we should keep in mind, there are more vehicles on the road and a greater population in 2022 than in 1982. Keep up your important work! Your concise articles are very effective in communicating excellent factual messages on energy.

  3. Great article. Plus now us tax payers will have to pay for all those charging stations, unlike gasoline stations. That is not how the free market place works.

    • Thanks for your comments. This administration does not have America’s interests at heart. Every action it has taken with respect to energy harms Americans.

  4. I think you have a missing zero in your discussion of life of the battery pack. Nissan warrants the battery pack on the Leaf will last 8 years or 100,000 mi.

    • Ken, Thanks. I should have explained in greater detail what was meant by the comment “replacing the battery after 8,000 or 10,000 miles”.
      You are correct about the manufacturer’s warranty, 8 years or 100,000 miles. The problem arises when a person sells his BEV before the 8 years has expired (or even later). How is the depreciation affected by the life of the battery. Is remaining battery life merely a straight line reduction in value? Who knows? Somehow the cost of a new battery has to be factored into the resale price of the vehicle, because a new battery will be required at some point. The average life of ICE vehicles is between 11 and 12 years, and around 150,000 mies. Is 11 -12 years the life of a BEV? We know the battery life is only warranted for 100,000 miles.
      With an ICE vehicle there’s no need to replace the power train when it’s resold after 8 years. But That’s not the case with a BEV where battery life becomes and issue.
      My article was obviously not clear that I was attempting to identify the added cost of the battery during the sale of a used BEV.
      Unfortunately, I had covered this in some detail in an earlier article, and I was wrong to assume the reader knew what I meant.
      ADDITIONAL COMMENT:
      Another way to look at the issue, is to compare the power train with the battery pack that’s replacing it.
      The power train lasts for 12 years, or 150,000 miles and costs around $7,000, while the initial battery pack lasts for 8 years, or 100,000 miles, and costs around $9,000. The price for a replacement battery pack, including the markup (and using the price charged for a replacement battery pack for a Bolt) is around $16,000.
      The issue is how to account for the cost differences when a BEV is sold?
      Even if the high cost of a replacement battery pack is ignored, it’s clear that there is a cost differential between a power train and a battery pack over their lives.
      This cost differential has to be accounted for when a used BEV is sold.
      The article approached the issue in one way, while there are other ways of doing so.
      (The electric motors in a BEV will probably last the life of the vehicle, so it’s the added cost of the battery pack that has to be accounted for.)