Report: Cut Battery Costs out of the Electric Vehicle Equation

Thu Feb 17, 2011 3:42pm EST

Cutting the cost of the battery out of the cost of owning an electric vehicle could be a key way to push electric vehicles into the mass market. That’s according to a report (“Changing the Game”) released Thursday from consulting giant Accenture, which studied EV pilot projects from the Netherlands to the U.K. to Japan.

The report found that amidst the many technical, regulatory and market challenges that remain between today’s nascent industry and President Barack Obama’s call for 1 million electric cars on U.S. roads by 2015, the main barrier is cost of EVs — and not surprisingly it’s the batteries’ fault.

“Until the cost per kilowatt-hour (kWh) [of a battery] dramatically decreases (to reach approximately $300/kWh), consumer uptake is likely to be limited to a dedicated and niche consumer market segment,” the report states.  The problem is, most EV batteries nowadays cost at least $450 per kWh — and that’s after decades of researchers making significant efforts to lower the cost. The limits of today’s battery chemistries just might have mostly been reached.

The solution, Accenture suggests, is “disaggregating” battery costs from the car, usually via leasing either the car or the battery itself. Not only would that bring down vehicle costs, but it would help deal with thorny warranty issues, given EV batteries will likely end up having a lifespan of 10 years or less.

Automakers would have to arrange those battery financing terms on their own, or they could partner with a player like Better Place, a Palo Alto, Calif.-based startup with plans for developing battery-swapping stations around the world. Changing out car batteries every 100 miles or so will require working with the EV manufacturers on warranties, and Better Place will have to figure out ways to pay for all those standby batteries.

Beyond the key battery-leasing concept, Accenture dived into how geographical differences will play into EV charging pilots. For example, BMW’s tests of its Mini-E plug-ins in key U.S. cities found range wasn’t as big an issue in New York and New Jersey, but all its drivers tended to have more than one car in the garage. BMW’s ongoing Mini-E tests in the U.K. and Germany may well yield different results. No doubt EV “roaming” (charging EVs across various service providers) will have to be worked out between utilities and charging infrastructure or automotive partners.

Utilities around the world are prepping for plug-in cars via pilot projects, and tools like PG&E’s new EV power pricing website are coming online to help consumers make sense of it all. Companies are partnering up to serve this new market, including Cisco’s link-up with car charging company ECOTality (c csco), Siemens’ co-marketing deal with Coulomb Technologies and General Electric’s pilots with Better Place.

For more on vehicles and IT check out GigaOM Pro (subscription required):

  • Report: IT Opportunities in Electric Vehicle Management
  • Mobility on Demand Takes Aim at Transport Networks’ “Last Mile”
  • Electric Vehicles Give “Mobility as a Service” a Jumpstart

Image courtesy of NScale7 via Creative Commons license.