With the advent of electric vehicles, the largest cost regarding its wholesale adoption is the electric car battery pack, which increases the retail price of the vehicles significantly. Although if the findings of a new study are to be believed, electric vehicle costs are going to get a whole lot more affordable.

The study published in March on the Climate change section of Nature has indicated that battery pack costs have reduced to below the estimations predicted for 2020. The study also estimated the actual rate of decline of EV battery costs.

Industry-wide EV battery costs have fallen by 14% each year from 2007-2014. Battery packs manufactured by the industry’s leading companies, namely Tesla and Nissan, have declined at a rate of 8% annually, bringing down the overall cost to less than $300 a kilowatt per hour.

In order to achieve such statistics, the study utilised data from 85 cost estimations which were released in peer-reviewed journals as well as data from reports by the battery and vehicle manufacturers themselves. Data concerning EV battery costs from industry analysts and the media were also taken into account.

“Learning rate, the cost reduction following a cumulative doubling of production,” say the authors in their summary, “is found to be between 6 and 9 percent, in line with earlier studies on vehicle battery technology.”

With over 20 years of lithium-ion cell production concerning consumer electronics, the overall improvement on a per year basis regarding cost-performance is sitting at 7%. Due to the fact that EV battery costs decline as a series of steps of sorts and not in a linear fashion, better cell chemistry, better production methods and economies of scale have reduced overall costs incrementally.
Specialists have indicated for a long time now that manufacturers of both cells and vehicles should follow the same curve, instead of utilising lithium-ion cells exclusively, much the same way that Tesla have.

Tesla’s batteries are composed of thousands of small formatted cells which have been adapted from the same designs as normal “commodity” cells found din consumer electrics to create innovative packs for their Model S luxury sedan.

Such innovations are believed to allow for the lowest kWh pack costs within the industry today.

As it stands, with the exception of VW, most makers have not embraced the extra costs that come with such interconnecting of formatted cells instead of the hundreds of larger cells utilised by GM, Nissan and even BMW.

At the end of the day the study indicates that the rate of decline for costs of automotive lithium-ion cells should follow the historic curve regarding consumer cells.
On the other end of the spectrum, the cost of gas-run vehicles has been indicated to have increased to around $3,000 running through 2012-2015 in order to meet stricter corporate average fuel economy standards, according to the U.S National Highway Transportation Safety Administration.

The rising costs of gas-run vehicles, and the price reduction of battery packs indicates that higher manufacturing and purchasing price tags of plug-in Ev’s will fall adjacently within the coming years.

Speculatively, this could result in a power-train of sales during the 2018-2020 period.