Posted by: carboncreditsusa | February 2, 2009

Electric Vehicles Face Huge Costs With Batteries As Range Increases

electricvehiclebatterycapacityrangecost

http://seekingalpha.com/article/117782-lead-acid-lead-carbon-batteries-the-only-option-for-average-consumer?source=email

 

Why Long Range EVs Can Never Be Cost Effective

In an EV, you pay a huge price for the batteries that give you an acceptable travel range and then pay a low price to fill your ‘tank’ with electricity. If you buy more batteries than you use on a daily basis, the breakeven cost of daily travel skyrockets.

In other words, the phrase “cost-effective long-range EV” is an oxymoron and an economic impossibility.

 

To demonstrate the point, I’m going to become a technology agnostic for a couple of minutes and discuss the basic laws of battery economics. While I will use a pure EV for discussion purposes, the fundamental rules apply with equal force to both EVs and PHEVs. In an attempt to avoid controversy and focus solely on fundamental economics, I’ll work with the following basic assumptions:

 

EV Range – 4 miles per kWh of battery storage;

Battery Cost – $500 per kWh;

Average Use – 12,000 miles per year (40 miles per day); and

Comparable Gas Mileage – 25 mpg (480 gallons per year);

The following table shows the battery economics for EVs that have ranges of 40, 60, 80 and 100 miles based on these assumptions. For purposes of the table, I’ve used straight-line depreciation of 10% per year on battery cost, imputed interest of 6% per year on unamortized battery cost, an average electricity price of $0.06 per kWh and annual maintenance savings of $180.

 

The only assumption that varies is the maximum EV range. If you don’t like my assumptions, feel free to change them and re-run the numbers using assumptions you like better.

The table shows that when you cut through the bafflegab, EVs only offer attractive economics if you carefully match your EV range with your daily driving habits. As soon as you start adding EV range that you won’t use on a daily basis, the economic benefits of EVs plummet. You can have an EV that is cost-effective, or you can have an EV that has long range for the weekend, but you can’t have it both ways!

There is an inherent logical conflict in the visionary argument that we need to develop expensive batteries so that we can manufacture a long-range EV that cannot possibly be cost effective. General Motors’ EV1 was a great car that was initially powered by lead-acid batteries. GM ultimately changed over to NiMH batteries because the lead-acid batteries of the day were not robust enough to handle the heavy demands of an EV. In the last decade there have been tremendous advances in lead-acid and lead-carbon technology and we now have a new generation of products that can stand up to the demands of an EV, but can’t provide the elusive 100 or 150 mile range that the visionaries assume everyone needs and wants.

 

As the EV markets develop, there will undoubtedly be buyers who insist on a long-range EV and are willing to pay a substantial premium for the flexibility. Those purchasers, however, will be a very small minority who don’t need to worry about petty details like monthly budgets, payment books and cost-benefit comparisons. For average consumers that need to stretch a paycheck and balance a household budget, the only sensible EV will be one where battery capacity and daily use are carefully paired to optimize the cost-benefit relationship. Given the basic laws of battery economics, I can’t help but believe average consumers will choose the cost-effectiveness of advanced lead-acid and lead-carbon batteries over the svelte lines and lower weight of their NiMH and Li-ion cousins.


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