Will lower battery costs save the EV revolution?

Not likely. Major assemblers are cutting EV output.

Lithium ion battery costs are falling, although the decline has levelled off in recent years. At about $150 per kilowatt hour, a typical EV battery like the 90 kwh Tesla powertrain has a cost somewhere around $13,500. A similarly powered internal combustion engine costs around $3,000 in the original vehicle. Replacing an ICE engine costs about double that owing to the labor costs of its installation.

With a $10,000 cost advantage for powertrain, ICE vehicles are likely to be less costly for decades to come. Both ICE and EV powertrains have an estimated life of 100,000 to 200,000 miles of driving, although an ICE engine can be rebuilt while an EV battery needs replacement. The claims of an operating cost advantage for EV’s ignores the roughly 10 cents per mile difference in powertrain wear and tear over the vehicle’s useful life. In reality, there is little or no economic benefit to an EV versus an ICE vehicle.

Battery technology will keep improving but there is a limit that is imposed by the laws of physics and current technology for lithium-ion batteries is approaching that limit. Solid state batteries promise savings in weight and recharge times and have a cost curve of their own to deal with once the technology is proven and becomes state of the art.

In the meantime, the recent cold snaps in Western Canada, Northwestern U.S. and Texas demonstrate that EV’s are incapable of efficient operations in cold weather, battery life dropping sharply and recharge stations having trouble supplying power where they exist. I think ICE vehicles will be the preferred choice for decades to come and will remain so until society accepts that the power needed to support EV adoption will have to come from fossil fuels or will not come at all.

My experience with my son’s Tesla Model X is that the car is exhilirating to drive, well designed and a seriously good choice if you can afford one, but the price is well out of reach for mainstream drivers. Lower battery prices are part of the solution to the barriers facing EV adoption but not the only barrier by a long shot.

Recent cutbacks in EV production by major auto assemblers are evidence that the early adoption surge has run its course and future growth will be determined more by relative costs and performance than any motive driven by “climate change” or the latest fad or government subsidy. The EV industry will have to stand on its own, and over time its superior vehicle performance will make it a great choice for many drivers. Today, smart money bets on ICE vehicles continuing to be the best choice for drivers.