Big Factories Won't Solve High Cost of Electric Vehicles, Carnegie Mellon Researchers Say-CMU News - Carnegie Mellon University

Tuesday, October 21, 2014

Big Factories Won't Solve High Cost of Electric Vehicles, Carnegie Mellon Researchers Say

By Tara Moore / 412-268-9673                       

Nissan Leaf Battery PackPITTSBURGH—Carnegie Mellon University researchers have found that the cost savings associated with manufacturing a high volume of batteries for electric vehicles may be nearly exhausted. Mass production lowers cost, say the researchers — but only up to a point

Professor of Engineering and Public Policy and Mechanical Engineering Jeremy Michalek, Associate Professor of Engineering and Public Policy and Materials Science Jay Whitacre, and Associate Professor of Engineering and Public Policy Erica Fuchs, together with Apurba Sakti, a postdoctoral research associate at MIT, analyzed the design and production of vehicle batteries in a study appearing in the Journal of Power Sources.

"Electric vehicle batteries are expensive," Michalek says. "Federal and state governments have been subsidizing 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 a similar hope, promising major cost reductions at higher volume.

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

Economies of scale are 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," Whitacre says. "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 8 percent, while increasing production beyond current levels may only cut costs by less than 3 percent."

Whitacre adds 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 notes that battery cost varies for different vehicle applications.

"Vehicle batteries aren't commodities," Sakti said. "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, explains the team.

"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."

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"We found that battery economies of scale are exhausted quickly, at around 200-300 MWh of annual production. That's comparable to the amount of batteries produced for the Nissan Leaf (pictured above) or the Chevy Volt last year," said CMU's Jeremy Michalek. "Past this point, higher volume alone won't do much to cut cost."