Li-ion Battery Costs Fall to $397/kWh in 2020: Not Enough for Mass Adoption of Electric Vehicles

Early demand for electric vehicles and plug-in hybrid electric vehicles has fallen short of optimistic projections, as vehicles like the Chevy Volt have missed sales targets. The key to growing the market is reducing the cost of Li-ion batteries, according to a Lux Research report. While larger-scale production will help reduce costs, the effect of scale-up and likely technology improvements bring nominal battery pack cost only to $397/kWh in 2020 – far short of the $150/kWh target from the U.S. Advanced Battery Consortium (USABC) and not enough to reach the mass market.

“Vehicle applications demand a different scale in both size and performance, and no other incumbent technology combines the power and energy performance of Li-ion batteries,” said Kevin See, Lux Research Analyst and the lead author of the report titled, “Searching for Innovations to Cut Li-ion Battery Costs.”

“Plug-in vehicles’ fates are tied to the cost of Li-ion batteries, so developers need to focus on the innovations that have biggest impact on cost,” he added.

To see what technologies can impact Li-ion battery cost, Lux Research studied the cost structure of Li-ion batteries, and considered the innovations that could drive disruptive decreases in cost necessary to spur growth of the electric vehicle market. Among their conclusions:

·         Materials improvement and scale are insufficient to cut costs. While scale does have a significant impact in driving costs down, it is not likely to lead to a disruptive drop in battery pack costs unless coupled with other innovations.

·         Cathodes remain the biggest target. Cathode capacity and voltage improvement hold much more value than anode innovation. In the optimal case, with a maximum voltage increase of 1V and capacity increase of 200 mAh/g, the nominal pack cost dropped 20%.

·         Beyond Li-ion remains a focus. Technologies such as Li-air, Mg-ion, Li-S and solid-state batteries push past the limitations of Li-ion batteries and achieve higher energy densities and specific energies. Each technology has its supporters – PolyPlus and IBM for Li-air, Toyota for Mg-ion, Sion Power and BASF for Li-S and Sakti3 for solid state batteries — but all face significant obstacles. A clear leading contender that can meet strict requirements on cycle life, power performance, and manufacturability has yet to emerge.

For more information, please click here to register for the complimentary Lux Research webinar, “Materials Innovation and Cost Cutting Strategies for Li-ion Batteries in Transportation,” on April 3^rd at 11:00 EDT.

The report titled, “Searching for Innovations to Cut Li-ion Battery Costs,” is part of the Lux Research Electric Vehicles Intelligence service. 

A123 Systems Launches Replacement Program for Potentially Defective Battery Packs and Modules

A123 Systems announced that the company has launched a field campaign to replace battery modules and packs that may contain defective prismatic cells produced at A123's Livonia, Mich. manufacturing facility. A123 has begun building replacement modules and packs and expects to begin shipping them to impacted customers this week. The company anticipates that the cost of replacing the affected customer modules and packs will be approximately $55 million and expects it will be funded over the next several quarters. A123 will host a conference call at 10:30 a.m. EDT.

"Recently, A123 has discovered that some prismatic cells made in our Livonia facility may contain a defect which can result in premature failure of a battery pack or module that includes a defective cell. We have isolated the root cause of the defective cells and we are confident that we have pinpointed the source of the defect and corrected it. As a result of engineering analysis and testing, we believe this is not a safety issue, and we have determined the root cause and have taken corrective actions," said David Vieau, CEO of A123 Systems. "We are working to get replacement packs and modules to impacted customers as quickly as possible. It is important to note that this defect has been discovered only in some prismatic cells manufactured at our Livonia facility. Prismatic cells produced at another A123 facility are not impacted. Further, the cylindrical cells we make at our facilities in China for a number of other transportation programs, as well as the majority of our grid energy storage systems and commercial applications, are also not affected by this defect."

Vieau continued, "In parallel with this field campaign, as we have discussed previously, we continue to implement actions that we believe will improve operations and minimize the possibility of quality issues going forward. This includes hiring a Chief Operating Officer, Ed Kopkowski, who has more than 25 years of global management and operational leadership in improving quality and reducing costs. A123 has produced hundreds of thousands of high-quality prismatic cells at another facility, so while the initial rapid ramp up of our Michigan operations to satisfy customer demand has resulted in near-term operational challenges, we are confident in our ability to overcome these issues. We are devoting our full resources to fixing this situation and moving forward to continue delivering high-quality products to our customers."

Energy Dept Awards More than $5 Million in Fuel Cell Projects

The Energy Department announced the investment of more than $5 million in two projects—led by 3M Company in St. Paul, Minnesota, and Eaton Corporation in Southfield, Michigan—that will lower the cost of advanced fuel cell systems by developing and engineering cost-effective, durable, and highly efficient fuel cell components. In support of President Obama's all-of-the-above energy strategy to reduce America's reliance on foreign oil, the 3-year projects will focus on meeting specific cost targets and boosting the performance of fuel cell systems for vehicles and stationary applications, such as stand-by power systems. These investments are a part of the Department's commitment to U.S. leadership in innovative fuel cell technologies that give American families and businesses more options that reduce petroleum use.

The Energy Department reports that its fuel cell R&D efforts have successfully in generated more than 300 patents and assisted approximately 30 products getting to market. At the same time, fuel cell durability has doubled, expensive platinum content has been reduced by a factor of five, and the cost of fuel cells has already fallen 80% since 2002.

To accelerate commercialization, the industry must continue to reduce costs and meet performance targets for fuel cell systems for vehicles and stationary power applications. DOE targets for vehicles include direct hydrogen fuel cell systems that, by 2017, have a peak efficiency of 60%, cost $30 per kilowatt, and have 5,000 hours durability, which is equivalent to 150,000 miles of driving. The two projects selected for award today will help drive technical innovation to meet these key targets.

3M Company—St. Paul, Minnesota—Up to $3.1 million

3M Company, in collaboration with General Motors, Lawrence Berkeley National Laboratory, and Michigan Technological University, will develop a durable, low-cost, and high-performance membrane electrode assembly for use in mass-produced fuel cell electric vehicles. The approach is based upon integration of 3M’s state-of-the-art nanostructured thin film catalyst technology platform with other components of the membrane electrode assembly.

Eaton Corporation—Southfield, Michigan—Up to $2.1 million

Eaton Corporation, Kettering University, Ballard Power Systems, and Electricore, Inc., will leverage advanced blower technology to develop and demonstrate an efficient and low-cost fuel cell air management system. Eaton will modify their existing twin vortices series advanced blower supercharger for this project that will deliver more power and better fuel economy in a smaller package as compared to other supercharger technologies.

National Grid Provides Grant to NY-BEST For Energy Storage Impact Study

National Grid presented a $98,000 economic development grant to the New York Battery and Energy Storage Technology Consortium (NY-BEST) at the consortium's second annual "Capture the Energy Conference" to support an advanced energy storage technology initiative that will identify emerging markets for energy storage job growth in the state and assist NY-BEST in its efforts to attract and promote energy storage businesses to New York.

The $98,000 National Grid grant will be used to develop an economic impact study and "roadmap" that will identify and quantify emerging markets for energy storage technologies, potential for job growth, and the policies, market drivers and other factors that are influencing this sector. The results will be used to aid NY-BEST in its efforts to establish New York as a global leader in the market, prioritize opportunities within the energy storage sector and leverage its strengths to attract new businesses. Grant funds will also support new promotional materials and an updated website for NY-BEST to help it reach a wide audience of stakeholders.

"The work that NY-BEST is doing to create a vibrant, world-class advanced battery and energy storage sector in New York State is helping to transform the state's economy," said William Flaherty, National Grid Director of Customer and Community Management. "National Grid is pleased to support those efforts."

 "NY-BEST thanks National Grid for recognizing the great potential of the energy storage technology market in New York and the economic development opportunities its expansion would create," said NY-BEST Executive Director, Dr. William Acker. "This National Grid funding will also help us promote and grow the rapidly evolving energy storage sector, attract new businesses and establish New York as the global leader in advanced energy storage product facilitation."

Energy Storage Tax Credit Legislation Proposed

The National Electrical Manufacturers Association (NEMA) on behalf of its Energy Storage Council applauded Rep. Chris Gibson (R-NY) and Rep. Mike Thompson (D-CA) for introducing legislation to promote adoption of state-of-the-art energy storage technologies.

The Storage Technology for Renewable and Green Energy Act of 2012 (STORAGE 2012) is a set of investment tax credits to promote adoption of the spectrum of energy storage technologies. Batteries, flywheels, superconducting magnetic energy storage, and other technologies would all be eligible under the legislation.

"Storing electricity when demand is low and supplying it when consumers most need it improves the efficiency of the grid, increases reliability, and reduces the need for additional generation," said NEMA President and CEO Evan R. Gaddis. "The technologies and applications of energy storage are numerous and this bill takes great care not to pick technology winners and losers."

This bill, HR 4096, would offer a 20 percent investment tax credit to energy storage used in connection with the power grid, with no project eligible to receive more than $40 million. To promote efficiency and distributed generation in the commercial and residential markets, the bill offers a 30 percent credit (up to $1 million) for on-site application of energy storage.

Energy storage meets the needs of consumers: rate minimization due to a reduced need to invest in new generation, efficiency of grid operations, integration of renewables, lowered emissions, and energy management and security.

"The number of established players and entrepreneurs in the energy storage space displays that these technologies are both here now and have great promise for revolutionary development going forward," said Jim Creevy, NEMA director of government relations. "This bill and its Senate counterpart (S 1845) provide the U.S. with the opportunity to make this country the center of energy storage development and production."