Elon Musk (Tesla CEO) postulated a “weak Moore’s law” for Li-Ion batteries, that the price/performance ratio will increase by 8% per year, or 9 years to double. The price/performance ratio is the ratio between the price per kWh of the battery pack and the amount of energy the battery can store. If current batteries can store 140Wh/kg and cost $500/kWh, an 8% improvement means either the storage goes up to 150Wh/kg, the price goes down to $460/kWh, or somewhere in between (145Wh/kg and $480/kWh). A Tesla battery pack would go from $35,000 (53kWh at $650/kWh in 2009) to $24,000 ($400/kWh in 2014), a reduction of about 10% of the entire price of the car over approximately 5 years. Combined with other cost saving methods, the next stage of the Tesla evaluation - the Model S – starts to look feasible. Its still not going to be the most affordable car, however significant progress is being made.

The cost per battery pack can be broken into two parts – the batteries themselves and the pack. The pack costs can be trimmed considerably with mass-manufacturing. Instead of hand assembling each battery pack and set of battery modules (a series of cells), semi-automated assembly can increase the throughput of the teams assembling dramatically while keeping the same number of people around, reducing the amount of employee-hours spent per battery pack.

The cell costs don’t come down as easily. This is the decidedly slower part of the electrification of vehicles. Following the 8% rule, automotive battery packs due in 2009 cost approximately $650/kWh. In 2014 this cost is about $430, and by 2017, the cost is $330/kWh, and by 2020 $260/kWh. Following the more agressive price decreases noted above, prices in 2017 would be $235/kWh, and by 2020 $172/kWh.

So by 2020, a Volt-style battery would cost $4,200, or about the cost of a new engine (a rebuilt one can be had for less). This assumes that other battery performance parameters do not improve – rather the Volt still requires a 16kWh battery and only uses 8.8kWh of the battery pack. If the current estimates of what battery specifications will be by 2020 (2,500W/kg, 250Wh/kg, 2,000 cycles and 4,000 recharges at 70%DoD) the Volt would be able to have its pack size reduced to 12.5kWh (50kg, 110kW), thus reducing costs further to $3,250 for the battery pack, and the total price premium of the E-REV system would be approximately $5,500. Factoring that cost over 5 years is $1,100 per year in savings needed over gasoline, which is achievable when factoring in savings in electricity costs over gasoline (approximately 9c or 11c/mile savings depending on cost of electricity), reduced maintenance costs ($150/yr for oil changes, etc) and reduced variability of fuel costs – my electric company needs a regulatory body’s approval to change the price of energy, the local gas station chain can add 10 or 15c to the price of gas over a holiday weekend because they feel like sticking it to us.

By 2030, barring any new technology that would leapfrog Li-Ion on price and performance, battery prices would reach $110/kWh, and total costs would be equivalent to a Prius premium today.

Over the long term, E-REVs are workable from a consumer finance standpoint. Initially, subsidies, longer warranties and extended payback periods will be needed to entice the consumer to buy in to the electrification of vehicles. If we can manage to stick with it for the next 5-7 years, it will take off and the nation can start to wave good-bye to oil and petroleum for their in-city commutes, and we’ll all breathe easier with less smog.

The price quoted is $350/kWh. This means the Volt’s battery is $5,600 for the battery cells only. All the electronics, battery casing, cooling/heating, etc, are extra and on top of that figure. The $8,000 estimate for the entire battery pack  seems to be plausible, if not right on the money. At the finished pack level, this is a cost of $1,000 per usable kWh. Its hopeful the usable kWh price for electric vehicles reaches $500 by 2015 and $250 by 2020. These price targets would be achieved through a combination of increased cycle life and depth of discharge, as well as advanced manufacturing technologies that decrease the time it takes to build a cell, module and pack and allow for higher throughput.

This doesn’t immediately impact the Volt’s MSRP however, because there is still the unknown of battery life. I did see a chart in a presentation (pg. 27) from MIT that depicted depth of discharge versus cycle life – while it was for NiMH and not Li-Ion, it is known that Li-Ion exhibits a similar pattern. It showed the number of cycles increasing logarithmically with depth of discharge; to 75% original capacity, it was about 1,000 cycles for 100% DoD, about 1,600 cycles for 80% DoD, and 2,750 cycles for 50% DoD. You can see that the increase is not linear – you get a 60% boost by reducing DoD from 100% to 80%, and a 175% boost from reducing DoD form 100% to 50%. The issue with automotive batteries is how they’ll be affected by temperature and how that impacts their cycle life.

The Volt would need about 3,800 cycles to 75% to meet its targets based on what GM has said up to this point. The goal appears to get to the 10 year/150,000 mile mark with 75% degradation in the battery pack, leaving a 12kWh pack, still enough to source 8.8kWh and leave margins on the edges (though this is a 73% DoD, as DoD rises it will accelerate the reduction of battery capacity). It appears that they’ll probably fall about 1,000 cycles short of what they would need, however that is the worst-case scenario – the 55% DoD is a upper bound and many times drivers may just being going out for a short drive and it would be to their benefit to recharge it when they return, since reducing their average DoD will prolong battery life and performance.

A life of 2,750 cycles at 40 miles per cycle would mean 110,000 miles – 40,000 mile short of the 150,000 mile warranty. This would require someone to drive exactly 40 miles per charge, and then charge it up, then drive 40 miles again, never using the gasoline engine. This isn’t too practical in the real world – either owners will always drive on electricity (reducing the average depth of discharge and increasing the battery cycle life) or they’ll be driving some miles on gasoline and not affecting the battery but still ticking miles off the warranty.

In the worse case scenario, I would expect that even at two charges per weekday (which would be exceedingly rare) and one per weekend day, the amount of time to get to 110,000 miles would be four and a half years (25,000 miles per year). By 2015, batteries should be somewhat cheaper ($500 per usable kWh, rather than $700, with a total pack price of $5,500), and the replacement batteries should last sufficiently long as to not need replacement before the original warranty period is up since the warranty doesn’t reset, rather the batteries will just need to get through the remaining 40,000 miles on the warranty.

If the Volt shell, engine and generator cost $25,000 (the cost of a high end Civic), the battery being another $8,000, the total vehicle cost is only $33,000. These numbers however, don’t include the additional labor since the vehicle isn’t being mass produced initially – only 10,000 units (maybe) for the first year, and battery packs will be assembled mostly by hand (see the 2nd to last paragraph) and more automation will be added to ramp production. It also doesn’t include any warranty, dealer markup, delivery, etc. If GM has to provide a second battery to 20-30% of Volt owners before the warranty is up, that could add another $1,500 to the cost of each car. It also doesn’t include any money to pay off the many years of research and development that have gone into the car, the battery testing lab, etc.

If GM is targeting 100MPG or more, and the EPA remains firm on the 45H/55C split, they’ll need to manage about 60MPG on the highway by my calculations (which is higher than the rumored 50MPG, which would mean combined 88MPG).

The figure is very impressive, and rest assured that once the promotional campaign kicks into high gear, GM will have a large amount of work explaining to people they need to plug it in every night in order to get that 230MPG figure. GM should build some sort of mapping app, where you can type in various destinations, put them in order and it would use Google Maps or something to calculate your daily and weekly MPG numbers. From there, they could give you your personal Volt MPG – a figure that would include things like listening to the radio, A/C, etc. Judging on my daily commute and various other activities, my personal Volt MPG is probably somewhere around 275-300MPG (fill up once every 8 weeks and drive 200 miles a week).

The main issue is that, at least with the Volt and other mixed-fuel vehicles is explaining to people not only how they operate but how to get the optimum fuel economy. Hopefully, GM would put in some sort of notification system if the user gets out of the habit of charging the vehicle nightly, along with other user behavior reminders/modification. I’d love it if I parked it in my garage and it would text me to remind me to plug it in if I haven’t.

(via: GM Fastlane Blog )

Lets look at the annual production numbers and average battery sizes for any number of devices:

Cell Phones – There are about 1.1B cell phones manufactured per year. If we assume that the average battery size is about 3Wh (3.3V at 900mAh), that’s 3,300,000 kWh of lithium ion batteries produced per year. This is the equivalent of about 200,000 Volt battery packs annually.

Laptops – In 2008, about 145M laptops were sold, and this is expected to increase to 177M in 2009. If we assume that the average laptop comes with a 45Wh battery (2.25 hours at 20W), thats 6,525,000 kWh, or a little over 407,000 Volt packs.

iPods and iPhones – Apple sold 55M iPods in 2008, and around 3Wh/device (it varies between iPod classic, nano, shuffle and touch, but Apple doesn’t disclose the sales breakdown between models), that’s 165,000 kWh, or 10,000 Volt packs (the current estimated amount for the first year’s worth of production). Add in iPhones (13.7M in 2008) at 4Wh thats 54,800 kWh or 3,425 Volt packs, for a total of 13,425 Volt packs for iPod and iPhone.

So yes, the Volt will use a lot of lithium ion batteries. The first years production (~12,000 packs in 2011) will have the same amount of capacity as Apple’s iPod+iPhone production. But even the rumors of future years of production (60,000/annually) would still be far less than all the laptop batteries or cell phone batteries manufactured on an annual basis.

The issue that constrains production will be manufacturing the cells, not that we’re running out of lithium to mine.

Autocar out of the UK is reporting that their GM source indicates there might only be one generation of the Volt vehicle. The powertrain will live on through mainstream products, but the Volt itself might go away.

Its an interesting proposition – the Volt vehicle will surely be a collector’s item, and while the model itself might die off, the Voltec powertrain that moves the vehicle will live on and be put into the mainstream, where GM could offer some vehicles with not only a hybrid option, but a Voltec option as well (no doubt marketing will come up with a better name – SuperHybrid or something like that).

This is a very promising development – to me in indicates that GM is expecting the powertrain to mature rapidly, both in functionality (size of AC motor to move vehicle, battery advancements, etc) as well as price of the components to fall enough to make it worth will to spend the time integrating the powertrain into multiple vehicles  – doing the math to come up with proper battery characteristics, motor and generator sizes, as well as adjusting the vehicle to fit the batteries and all the other equipment needed. If we assume a 35% reduction in size and weight of the battery due to increased L/Wh and another 10% due to the better performance characteristics (increased depth of discharge) between 2010 and 2015, that would allow for the current six foot tall T shaped battery to drop the top of the T to allow a I shaped battery that is only about 5.5′ tall, or allow a similar sized battery pack for larger vehicles.

I’m still hoping for an E-REV Ford Escape. Hopefully they have one for sale by the time I want my next escape in 5 years…

Source: Autocar (UK)

The article and accompanying video are a good read, and a few things stuck out at me.

First is that GM seems pretty insistent that the battery pack will last as long as it should, and wont need to be replaced. This is in contrast to whats expected by people following the development of the car. GM states that the batteries will last the entire 10 year, 150,000 mile target, but also be suitable to be re-used in a climate controlled environment after their time in the Volt is up. This would be idea for utilities to backup intermittent power like solar and wind. If GM makes 200,000 Volts in the first four years, that’s 3.2GW of batteries that will need recycling after that 10 years is up. Even if you derate their capacity by 25%, that’s still 2.4GW of storage. The average home uses around 11kW, so that 2.4GW of energy storage could store solar power and disperse it to power 30,000 homes over the course of six hours (say, from 6PM to midnight).

Next is GM’s generation 1 model production targets. They said in the video that all first generation Volts will be eligible for the $7,500 tax credit. GM’s limit is 200,000 (which is why I used that figure above), so I would expect a four year first generation run (20K units for year 1, 60K for years 2, 3 and 4), and we would see a generation 2 Volt sometime around the end of 2014. Its fun to think what kind of additional features GM could bring to the table in the second generation – a full sized sedan with a bigger motor and better batteries with a depth of discharge of 80% rather than 50%, and higher watt-hour to weight and volume ratios.

GM also doesn’t seem to have the range extender ready to go. Granted, we’re still a ways away from the official production time, but the test drives GM has offered recently have been electric only. Another point that I liked was that the author indicated that the whine associated with the electric traction motor was non-existent. That will be a huge plus from the user experience standpoint.

No one knows for sure if GM will be able to deliver on time, we wont get a better idea until their 75 integration vehicles are out on the road and they can guage real Volt handling and performance.

Perhaps the most pertinent technical quote is the following…

An important consideration that people without a technical background don’t understand is that you can either have a high power or a high energy cell chemistry, but not both. Since the battery pack in a plug in hybrid like the Volt has to generate the same *power* as a much larger battery pack in a pure electric vehicle, it has to use a low energy cell chemistry.

This is true, and it explains why the Volt’s battery pack is both larger and heavier than proportions might expect – the Tesla Roadster battery pack is about 1,000lbs, while the Volt’s is estimated to be about 400lbs. So instead of the Volt having 20% of the range and 20% of the battery weight of the Tesla, it has 20% of the range and 40% of the weight.

With Tesla’s battery pack, you pull a smaller amount of power from each Li-Ion cell, where as the Volt has fewer cells, the power load is spread out amongst fewer cells so each cell has to generate more power. Musk states that the battery chemistry must adapt to be able to provide that much power, and it results in a lower energy density – resulting in higher volume and weight. Given that battery chemistry is pretty much always a trade-off, there isn’t much you can do about it. If there were a “perfect chemistry” with respect to price, manufacturing, energy density and power, we wouldn’t be having this discussion.

Though what Mr. Musk doesn’t address is that at some point, we reach the ceiling for vehicle performance – going to 0 to 60 in 6 seconds for a standard sedan is great, and at some point, the average consumer isn’t really demanding more performance from their vehicle. As chemistry improves, cells will be able to deliver the necessary power and with today’s maximum energy density, as the recent innovation in LiFePO4 batteries demonstrates, overall cell performance will improve as we move into the future. While the pure EV will always be ahead from a spec sheet standpoint, in a practical sense there will be a limit as to how fast you can make a sports car: tire traction limits, 0-60 in 1 second is about 3Gs (which is a lot, but its not sustained, rather over a short period of time; I’ve been on the Mission: SPACE ride at Epcot Center in Florida, and that was a sustained 2.5Gs and that was pretty intense, and there have been two deaths on the ride associated with pre-existing conditions).

While Musk’s comments are very relavant now, it is unlikely that they will be relavant for the life of electric vehicles – within 10 or 15 years it is entirely likely that all PHEVs offer custom ranges (25, 50, 75 miles) and have the necessary power and charge cycle capacity to satisfy the 10 year/100,000 mile warranty required by law. Meanwhile, the more pressing problem for the future of Tesla is recharging pure EVs as quickly as you can fill a tank of gas today. The large amounts of current (480V/1,125A) needed to recharge a 160mi Model S in five minutes is prohibitive.

The 48MPG rating isn’t accurate by any means. The first and most obvious way would be to give it a different fuel economy area of the window sticker. This would signal to the buyer that this is not a normal car and that it has characteristics that no other car has had before.

Next would be to segment the fuel economy into two separate portions. First is the fuel economy based on the battery alone. The information provided would be the standard city/highway/combined values that people are accustom to, but would be the electric only range value. Also, an “estimated cost to charge” value which would take the national average energy price and the amount of energy needed to fully charge the battery (this would include any charging efficiency – usually 85% meter to battery).

The second portion of the sticker would be the typical MPG rating that would tell the buyer what kind of fuel efficiency they would expect after the battery has used up its charge. In other words, the distance traveled on battery power alone divided by how much fuel does it take to fill the battery up after its been tapped out (this assumes however, that the battery can accept all the power generated by the engine, if not, then the methodology would need to be adjusted).

Finally, near the bottom, we should have something to allow folks to easily compare between different RE-EVs. This would probably take the form of an amount of miles followed by an estimated cost (at a fixed rate between all stickers for a given year). This way, a vehicle with longer range but lower MPG could be compared against a vehicle with a lower range and higher MPG.

So what would the sticker look like? I figure something like this…

Volt Fuel Economy Sticker

Maybe its because I’m more analytical that I would want a range table at the bottom, and there might be a better way to convey that information to the consumer (a graph? I dunno). But for now this will have to do.

So what would it take to see prices cut in half? A huge increase in production output. Probably on the order of at least one major auto manufacturer.

So where would that leave us? Well, taking the Volt as an example. The battery pack is estimated to cost about $10,000. If the unit costs $40,000 to produce (based on the latest estimates) that means the car is $30,000 and the battery is $10,000. So if you just cut the battery cost in half, you’re only reducing the cost of the car by $5,000. Now granted, that does help out the ROI tremendously, as I’ll cover later, but its not that big of an impact with respect to the price from the consumer’s standpoint.

Likewise, the Tesla Roadster battery pack is estimated to cost at least $30,000, so a 50% reduction would only reduce the cost of the car by $15,000 – which has a current MSRP of $109,000.

So what does it take? As much as I hate to say it, time. Its going to take a few research, development and production cycles to bring the cost down. The second generations of EVs and PHEVs will bring the break-even point down from 5-7 years to 3-5 years. The decreased battery costs will help, but the entire vehicle’s systems will need an efficiency overhaul from parts to assembly. We see this now, with Honda working on its second generation IMA (integrated motor assist) hybrid technology for the future Civic hybrid and the new Insight II that is due to be revealed sometime soon (next few weeks). Likewise, Tesla’s 1.5 powertrain boosted the range by about 4%, which might not sound like a lot, but it was an incremental upgrade from a electronics standpoint.

When it comes to EVs and PHEVs that are lithium-ion based, I think of three seperate checkpoints: 2011, 2013 and 2015. 2011 is when we start to see the first generation of mainstream EVs and PHEVs – the Volt and the Tesla Model S. 2013 is when the followers will bring out their first generation PHEVs and EVs, and this is where I start to see prices come down for the batteries as production capacities increase.

By 2015, we start to see the first cars of the second generation arrive, and production ramps up dramatically. This is also where we start to see advancements in the battery technology – things like substantially changing the chemistry and alterting the anode to increase energy capacity and charge/discharge speeds – really start to take hold that deliver dramatic performance increases. Altairnano has already produced their batteries for testing that have a very large charge/discharge current as well as a very high cycle count – on the order of 10,000 cycles, enough for 27 years at one cycle per day or half a million miles – far longer than the life of the vehicle. A 15kWh battery that delivers 50 miles of electric-only performance and the battery can charge completely from  a 240V/40A wall outlet in about 90-100 minutes (or about 16 miles per half hour). Combined with the gas-based generator to extend the range of the vehicle up to 350 miles per tank+charge, and a price that provides a break even within 5 years, and versions with smaller batteries and a 35mi range that will allow for a breakeven within 3 years assuming the driver can keep 90% of their travels on the battery.

I’ve covered why Solar power is important before. But this is really the piece that will probably cement it and make sure solar power is here to stay. Not to be too optimistic, but I wouldn’t be surprised that if by 2016, solar power is efficient enough for us to not have to renew the ITC!

Lets also take a look at the other energy-related provisions of this bill…

• Biodiesel tax credit
• 50% Write-off of facilities related to cellulosic ethanol before the end of 2013
• Tax credit for Plug-in electric hybrids (the upcoming Chevy Volt would receive a $5,000 credit, the base amount is $3,000 for a car with a 5kW battery)
• Tax credit for energy efficiency improvements to existing homes, as well as new commercial buildings
• Expedited depreciation for smart grid and smart meter systems (from 20 years down to 10 years)

The one that stuck out to me that I wasn’t aware of was the credit for PHEVs. I’m a huge fan of EVs and PHEVs – the Chevy Volt can reduce the amount of gasoline consumed on a per-car basis upwards of 95% – even up to 97-98% in various circumstances. Of course, this would require the car also run on E85 (which GM has committed to), and hopefully this E85 would be cellulosic rather than corn-based.

There is one thing in this bill in the energy section that made me take notice – a provision to make the black lung disability trust fund solvent. So the next time you hear someone complain about renewable subsidies, remind them that coal not only has an impact on the environment, but on the workers too, and the federal government is going to spend $1.2B on making this fund solvent for all the miners who will have to suffer with black lung.

The bill does other things too, most notably bump up the AMT limits and extend the deduction of local and state taxes for 2008 (yeah for me since I don’t pay state income tax but do pay a good amount of money in car registration “fees” and property taxes).

The bill is supposed to be packaged in such a way that’s its hard to vote against – it is called “The Jobs, Energy, Families, and Disaster Relief Act of 2008″ after all. I would expect it to pass.