Plug-in electric vehicle (PEV) sales are exploding. Annual global sales are up tenfold in just five years

Plug-in electric vehicle (PEV) sales are exploding. Annual global sales are up tenfold in just five years — from a mere 45,000 in 2011 to a record 448,000 last year.  The United States is probably the toughest market for EVs in the world since 1) we don’t have a significant gasoline tax and 2) we have a massive infrastructure of gasoline fueling stations and 3) we drive much farther than most everyone else in the world — so range matters more to us.

See April article, “Electric Car Batteries Just Hit A Key Price Point”). A March study in Nature Climate Changedetermined that “industry-wide cost estimates declined by approximately 14% annually between 2007 and 2014, from above US$1,000 per kWh to around US$410 per kWh.” The study also looked at battery electric vehicle (BEV) leaders, like Nissan’s LEAF and Tesla’s model S. They found that “the cost of battery packs used by market-leading BEV manufacturers are even lower, at US$300 per kWh.”

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So the best manufacturers have already reached the battery price needed for cost parity with conventional cars that a major 2013 study by the International Energy Agency projected would not happen until 2020.

Without even counting whatever Apple does, there should be at least three or four affordable EVs with a 200+ mile range on the market before the end of the decade, including one from Tesla.

We are getting close to making PEVs both an economic and practical reality.  UBS projects that “the payback time for unsubsidised investment in electric vehicles plus rooftop solar plus battery storage will be as low as 6-8 years by 2020.” Of course, oil prices have been dropping, too (as have solar prices). The battery study from 2015 found that prices would need to drop under $250 per kWh for EVs to become competitive. Further, it concluded:

If costs reach as low as $150 per kilowatt hour this means that electric vehicles will probably move beyond niche applications and begin to penetrate the market more widely, leading to a potential paradigm shift in vehicle technology.

Can electric car batteries hit that price point? The study projects that costs will fall to some $230 per kilowatt hour in the 2017 to 2018 timeframe. Tesla Motors and Panasonic have started building a massive $5 billion plant capable of producing half a million battery packs (plus extra batteries for stationary applications) a year. It is expected to be completed in 2017. Tesla and Panasonic estimate this “Gigafactory” with 6,500 workers will lead to a 30 percent reduction in cost, which the recent Nature Climate Change study said is “a trajectory close to the trends projected in this paper.”

It may well be that $150 per kWh can be hit around 2020 without a major battery breakthrough but simply with continuing improvements in manufacturing, economies of scale, and general learning by industry. This seems especially likely if China continues its explosive growth in EV sales:

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In fact, Chinese EV sales were on track to more than double to 180,000 in 2015, with “China becoming the largest EV Maker in the world and also the largest market for plug-ins globally.”

We are getting close to the same type of inflection point in price and performance that led to the explosion in solar photovoltaics several years ago. Electricity remains by far the best and cheapest alternative fuel that can be made without releasing CO2. The countries wise enough to encourage their own domestic industries and market will reap large rewards in both jobs and exports.