Electric Vehicle Batteries to drop 50% in price by 2020

Even without technical breakthroughs, costs for batteries could drop substantially by 2020.

Consulting firm PRTM conducted a two-year survey of battery and auto manufacturers and suppliers and it estimates that by 2020 the cost of batteries will drop 50 percent, even without technical breakthroughs in the batteries themselves.

For example, while battery packs are now custom-designed for new electric vehicles, modular designs that can be easily adapted for different models could lead to higher volumes and lower costs says Oliver Hazimeh, the head of the global e-Mobility Practice at PRTM. Manufacturers will also set up manufacturing plants closer to customers, to save on shipping costs. Breakthroughs in materials and other technological advances could bring down costs even more.

With such a drop in battery costs, electric vehicles would be just as affordable as gas-powered cars, if you include the fact that electric cars cost less to operate--recharging them costs a lot less than filling up a gas tank, Hazimeh says. One manufacturer, Tesla Motors, claims you can go 250 miles on $5 of electricity. Going that far on gasoline, in a car that gets 30 mpg, would cost about four times that much. In an ICE powered sports car with performance comparable to the Tesla, it would cost ten to twenty times more.

Most people don't calculate how much a vehicle will cost to operate so some consumer education may be required, Hazimeh says. Over ten years of use, the cost of fuel alone (not including scheduled service and maintenance) can easily equal the purchase price of a petrol powered vehicle therefore doubling the total cost of ownership.

PRTM estimates that by 2020, battery powered cars will account for 10 percent of new vehicle sales.