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Expensive batteries are holding back electric cars. Can that change?

One of the big reasons why electric cars have been slow to catch on is that batteries are still hugely expensive — usually around $12,000 to $15,000, or one-third the price of the vehicle — and can provide only limited range.

The public has become accustomed to rapid progress in mobile phone technology, computers ... These developments are due in part to the ongoing exponential increase in computer processing power, doubling approximately every 2 years for the past several decades. This pattern is usually called Moore’s Law and is named for Gordon Moore, a cofounder of Intel.

Now here's the bad news. "There is no Moore's Law for batteries," Schlacter says:

The reason there is a Moore’s Law for computer processors is that electrons are small and they do not take up space on a chip. Chip performance is limited by the lithography technology used to fabricate the chips; as lithography improves ever smaller features can be made on processors.
Batteries are not like this. Ions, which transfer charge in batteries, are large, and they take up space, as do anodes, cathodes, and electrolytes. A D-cell battery stores more energy than an AA-cell. Potentials in a battery are dictated by the relevant chemical reactions, thus limiting eventual battery performance. Significant improvement in battery capacity can only be made by changing to a different chemistry.
Scientists and battery experts, who have been optimistic in the recent past about improving lithium-ion batteries and about developing new battery chemistries—lithium/air and lithium/sulfur are the leading candidates—are considerably less optimistic now.

So that's the pessimistic case. Batteries will continue to be a serious limitation for electric vehicles unless we get dramatic new breakthroughs in battery chemistry.

But is Schlacter being too gloomy? On Twitter, Ramez Naam pointed me to a 2009 study finding that lithium-ion batteries have made some significant strides in the past two decades, with energy density rising and prices falling.* (That said, the rate of improvement appears to be slowing toward the end):

Meanwhile, the truly optimistic analysts will argue that even incremental tweaks can yield dramatic results. So perhaps there's no need for Moore's Law-style gains. A 2012 analysis from McKinsey & Co., for instance, predicted that the price for lithium-ion batteries could fall by as much as two-thirds by 2020, down to around $200 per kilowatt-hour.

All that's needed, the McKinsey report argued, is slow, steady improvement: As new factories come online to produce more and more batteries, economies of scale will drive down the price. So will a reduction in the cost of components, as well as smaller technical advances in cathodes and electrolytes that increase the capacity of batteries.

And if battery prices do fall below the $250/kwh mark, as the McKinsey researchers expect to happen within the next decade, then suddenly electric vehicles make a lot more financial sense, even with gas prices at their current levels. The economics shift drastically:

This chart sums up the basic situation: The overall cost of batteries will go a long way to determining how quickly electric vehicles gain in popularity. But the much, much harder question is whether big, long-shot chemical breakthroughs are the only thing that will get us there, or whether smaller steps might do the trick.


Note: It's worth clarifying something that commenter perkinisms notes — the rate of improvement in lithium-ion battery energy density appears to be largely linear, while the improvement in computer processing power has been exponential. Batteries aren't improving quite as fast.