4 minute read
EDITORIAL
Mike Halls • editor@batteriesinternational.com
The revolution that stalled (or may just be about to)
What if many of the assumptions people have made about the so-called EV revolution are based on false premises? Let’s go through two of them. Premise number 1: the price of lithium batteries will continue to fall until they are below the price of lead ones. This will underpin the EV revolution — cheaper batteries mean cheaper cars: consumers will vote with their feet. The falling cost of lithium batteries has been one of the core principles behind the belief that EVs will overtake internal combustion vehicles. There was good reason to think this realistic: from 2010 to 2020, the price of lithium ion battery packs fell by almost 90%. The average price of a lithium ion battery pack stood at an eye-watering $1,200/kWh in 2010. In 2020 it was around $105/kWh. But that’s taken a huge hit in the past year. In 2021 Bloomberg New Energy Finance analysts warned that the higher costs of raw materials could push the average price of a lithium-ion battery pack up to $135/kWh. But that was before the supply chain problems around the world kicked off after the pandemic and, now the energy crisis caused by the Russian invasion of Ukraine. During the first quarter of 2022, the average cost of lithium ion battery cells shot up to $160/ kWh. One recent study estimated that this year, between March and June, global cell prices have risen by 20%-30%. S&P Global Mobility predicts it could cost car manufacturers up to $8,000 more to make an EV battery pack by the end of 2022. Part of the first premise: cheaper batteries mean cheaper cars: consumers will vote with their feet is now the opposite. More expensive batteries means dearer cars: consumers, already concerned that EVs are still more expensive than their ICE counterparts, will vote with their feet — in the other direction. Premise number 2: EV adoption rates will rapidly climb once phase-out dates for manufacturing ICE cars come in. This is meant to be a corollary of the first. Unfortunately, it is equally flawed. One British analyst recently said that in the UK, where the sale of new ICE cars will be discontinued by 2030 and hybrid vehicles by 2035, the second-hand car market will receive a huge and unexpected boost in the run-up to the end of the decade. “At the top tier of the market,” he said, “there is marginal price sensitivity over high-end cars. But when you come to the family saloon level and below, price increases of as little as a couple of thousand pounds will affect buyer decisions. Affordability is key.” A similar picture is seen in the US where first quarter 2022 sales of fully-electric vehicles reached 5% market share for the first time. However, of the nearly half a million EVs sold in America last year, roughly 70% were Teslas. The reality is that for most middle-class Americans EVs are still too high to be practical — and look set to stay that way. This appears to be one of the major worries of its carmakers. “At the end of the day,” one consultant told Batteries International at BCI this May, “our nation’s automakers just want to sell cars. That’s what they do. They’re not politicians (or they shouldn’t be!)
“They’re worried and acutely conscious of the disincentives that they see coming from the price hikes that they will have to impose on new vehicles — many of which have still yet to see the manufacturing line. More expensive battery packs are just bad news for them. “Moreover, their enthusiasm for electrification of the nation’s fleet is decidedly lacklustre. They’re having to respond to legislative pressure on CO2 tailpipe emissions and state strictures on what cars we should be driving in a few years’ time.” The consultant added that CEOs had been actively lobbying the federal and state governments for the last few years to slow down the pace of change. Oddly enough another figure at the BCI conference said that there was mounting opposition — but behind the scenes— by electric utilities to the decarbonization of the vehicle sector. “They’re not anti-environmental in the slightest — most are embracing the low-cost renewable energy being generated by renewables. They’re just worried about having to ramp production up by as much as a factor of five in the next seven years and beyond. “Any transition to EVs looks set to be bumpy to say the least.” And they may have to. This year 12 states have announced that they are seeking to set a target date for the nationwide phase-out of ICE car sales. California, Connecticut, Hawaii, Maine, Massachusetts, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, and Washington are all pushing for a nationwide ban of gasoline and diesel-powered light-duty vehicles starting in 2035. In the free-for-all that characterises state governments and individual cities in the US, there is even talk that California’s ICE ban will be accelerated to 2030 and, irrespective of that, the cities of Oakland, Culver City and Berkeley are already targeting a 2030 deadline. Additionally, the premise that cheaper EV batteries are inevitable in the long run is flawed — at least for this coming generation. The shift away from fossil fuels to renewables has meant that global demand for raw battery materials — namely nickel, lithium, copper, and cobalt — will be increasing rather than otherwise.
