Why electric vehicles are expensive. Factors affecting EV Cost and Future Developments.



As every electric vehicle enthusiasts and customers know, main hurdle for the electric vehicles is the cost of the vehicle and driving range. Even though maintenance and running cost of EVs are very low compared to IC Engine vehicles, initial buying cost of EVs are always a a big drawback in customer point of view than range.

In this article you can read about the factors that affect EVs cost and other hurdles.

In Electric vehicle's one third of the cost is for the battery. Tesla CEO Elon musk said in Battery day event, to provide electric vehicle for reduced price, there has to be a drastic change in battery manufacturing and technology of the batteries. Innovations and in-house manufacturing will help to reduce the battery cost.

Why Electric vehicles are expensive??

Electric vehicles are expensive because of the components and technologies used in them. Battery is the source of energy and it accounts for 30-40% of the total EV cost. This batteries are still very expensive compared to fuels of IC Engines. In Li ion batteries, the costliest component is the cathode as the materials needed to make them are expensive. Metals like cobalt, lithium, manganese, nickel etc are used in these and these are expensive to make it into final form. These compounds need to mine, process and convert into high purity form to be used in batteries.

Over the last decade, average price of the batteries  went down by 87%, but market studies shows that still it has a long way to go to convince the customers and reduce the price as per their expectation.

If we consider world's lithium ion manufacturers, Asia accounts for 80% of the existing capacity and China leads in that. Big companies like LG, Panasonic etc are the lead manufactures and battery supply has a great demand which reflects in its price. In current situation, China dominates the battery manufactures because they owns most of the mining area of battery raw materials. Also large mining of raw materials like lithium, cobalt, manganese etc are taking place in Australia, Chile, and some African countries. Overall transition of these battery components from raw to final form is expensive and hence battery pack.

Apart from the battery most of the countries are not manufacturing components for EVs indigenously. They import it from bulk producing countries which increases the overall price of EV. Also EVs adopt futuristic design and technology which also impact the overall cost.

Why Electric vehicles get cheaper and better in future??

As per many market analysis, price of li ion batteries have fallen drastically over last ten years. And in near future, researchers are planning to replace cobalt, which is the costliest component in battery by nickel. Nickel is comparatively cheaper and holds more energy than cobalt. This will also reduce the total volume of the battery pack. And in case of safety, Cobalt is more safer as it doesn't catch fire easily. So researchers have to work more on the safety side while using nickel as a substitute.

Other than lithium ion batteries, many other types of batteries like solid state battery, fuel cell, aluminium battery, ultra capacitor etc are under development stage. When this technology commercialises, that gives a huge boost for EVs.

Read the article based on IHS Markit analysis on reduction of battery cost below $100 per kWh.

In future, there will be a standard design for battery packs used in electric vehicles, rather than tailor made designs for each model, which is the present situation. So simplifying the design and universal design code for battery packs will reduce the price by a good margin.

Also Like Elon musk said, large manufacturing plants and in-house manufacturing of batteries will also reduce the cost. As per several market analysis reports, Europe is also building new manufacturing plants which may even surpass North America in battery manufacturing. And many countries have been encouraging in-house research and development centre for EVs which gives a sustainable growth for electric vehicles worldwide. 

Lot of big companies like Toyota, Sila nano technologies, QuantumScape Corp. etc have been working on new and advanced battery technologies and its on the verge of production line. Even though electric vehicle faces many hurdles, things are changing very fast and in next decade we can see electric vehicles competing IC Engine vehicles in the market.

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