Weekly Electromobility News

Tesla Shuts Down Factory to Prepare Model 3 Production; Honda and Hitachi Plan to Form a JV for EV Motor; EV Insiders Believe Battery Cost Will Be Less Than $100/kWh Before 2020


Tesla Shuts Down Factory to Prepare Model 3 Production

According to Reuters, Tesla announced that this month it would shut down its Fremont factory for one week, to increase capacity of the paint shop and perform general maintenance. The shutdown is intended to prepare the factory for Model 3 production starting in July.

The test run of Model 3 production will start as soon as 2/20. The status should be updated in the shareholder report on 2/22. On the other hand, minor design changes could still be underway.

Separately, according to Fortune, workers at Tesla factory are trying to unionize. United Automobile Workers (UAW) union said workers at Tesla had approached the union and it would greet them with “open arms”.

Honda and Hitachi Plan to Form a JV for EV Motor

According to Fortune, Honda and Hitachi Automotive Systems will form a joint venture in July, to produce electric car motors. The investment is 5 billion yen (or $44.69 million). Hitachi will hold 51% of the JV and the remaining 49% ownership will go to Honda.

Honda CEO Takahiro Hachigo commented that “producing motors is capital intensive, so rather than just manufacturing them for our own purposes, we would like to produce in large volumes with the possibility of supplying a variety of customers.”

Just last week, Honda and GM formed a JV Fuel Cell system Manufacturing LLC to make fuel cell power systems for both companies.

EV Insiders Believe Battery Cost Will Be Less Than $100/kWh Before 2020

According to a blog on Wards Auto, during the 2017 CES, EV experts expressed their confidence on future battery cost cut. They believe the cost of the battery will be less than $100/kWh before 2020, which would bring electric power system cost down to the internal engine level and thus makes EV cost competitive. Furture, they think $80/kWh will be reached “not long after that”.

Thoughts on Forecasting 35% of New Car Sales from Electric Vehicles by 2040

A few days ago, Bloomberg New Energy Finance (BNEF, owned by Bloomberg L.P.) published a forecast on global electric vehicle sales. The study suggested that, by 2040, 35% of new car sales will come from electric cars, which equals a total of 41 million electric cars sold annually. In 2015, 462,000 electric vehicles were sold worldwide, accounting for half of a percent of total car sales.

In order to reach 35%, electric car sales will need an “S” trend to happen in the future. There are basically three stages in terms of the “S” trend – an initial acceptance period with slow growth, followed by a period of rapid market growth, and then entering another slow period after saturation. Things like smartphones and color TVs and even the hybrid cars to some extent all have followed this trend.

For electric cars, the kickoff on sales will mainly rely on two factors according to the report – drop of battery cost as well as decrease in oil demand.

Regarding the battery cost, BNEF anticipates the pack cost to be $120/kWh by 2030. The timing is less aggressive (and maybe more realistic) than that set by USABC (a consortium formed by GM, Ford and Fiat Chrysler). USABC targets year 2020 for the pack cost to go below $125/kWh. Carmakers think electric cars will have a comparable cost to regular cars when the battery cost decreases to this level.

The battery pack cost has been dropping over the years. It is around $300/kWh for the upcoming Chevrolet Bolt. Korean battery maker LG Chem will build the pack together with other powertrain components in the car, which helps reduce the cost.

Regarding the oil demand, the report argued that when 2 million barrels of oil per day are replaced by driving electric cars, the sales will take off. 2 million barrels per day surplus is believed to cause the plunge of oil price in 2014. This day would come as early as 2023.

2 million barrels of oil equal to 84 million gallons. In 2013, the average fleet light duty vehicle fuel efficiency in the US is 21.6 mpg. Assuming a 5% annual improvement, the fuel efficiency will become 35.2 mpg by 2023. Say cars drive 35.2 miles per day on average (or about 13,000 miles per year), then they will consume 1 gallon of oil per day per vehicle. Therefore, 84 million gallons mean 84 million electric cars on the road in total. Considering that there are 1.3 million EVs on the road right now, 84 million is really a very exciting number.

The BNEF report also indicated that plug-in hybrid sales will reach the peak around 2030 and then starts to drop down. Plug-in hybrids, as a transitional new energy vehicle technology, should have their reasons to stay on the market for longer time: 1) since the battery size is usually smaller than that of all-electric cars, the costs of plug-in hybrids are less sensitive to battery cost; 2) plug-in hybrid cars can run all-electric for short range commuters and run hybrid for longer range, both of which have much better mpge than regular cars; 3) plug-in hybrids can be easier for consumers to accept than all-electric cars. After all, electric cars not only need to be cost competitive, but also rely on breakthroughs in other areas like fast charging and charger infrastructure construction.

In this regard, plug-in hybrids may have a chance to follow the growth pattern of hybrid cars. Carmakers are acting too. For example, BMW and Mercedes-Benz have plans to build plug-in hybrid versions of the majority of their lineups in 2020-2025 timeframe.

It is also interesting to notice the shift of views on the future for oil over time. Initially, it was concerned that oil would be depleted before alternative car technologies become mature. Then, there was a theory that the depleting oil would drive up the price and force the alternatives to become mainstream. Now, people start to think that someone may end up holding the useless barrel. Electric cars have helped shape the shift of views.

Second-life Applications Could Help Reduce the Cost of EV Batteries

High battery cost keeps the cost of electric vehicles (EV) high. As a result, carmakers still are relying on government incentives to sell EVs at somewhat more acceptable price. It was recently reported on Forbes that the cost of battery pack in the new 200-mile Chevrolet Bolt would be significantly reduced to under $300/kWh (The packs will be supplied by LG Chem). It is interesting to notice that some existing battery replacement plans/warranties have already put the $/kWh well below 300.

General Motors Chairman and CEO Mary Barra drives the 2017 Chevrolet Bolt EV onto the stage Monday, January 11, 2016 at the North American International Auto Show in Detroit, Michigan. GM Executive Vice President Product Development Mark Reuss rides in the passenger seat. The Bolt EV offers more than 200 miles of range on a full charge at a price below $30,000 after Federal tax credits. (Photo by Jeffrey Sauger for Chevrolet)
(Photo: Barra Drives Chevrolet Bolt EV Into NAIAS Spotlight, on January 11 2016. © General Motors.)

More than 3 years ago, Tesla introduced a warranty option to replace the 85 kWh battery pack for $12,000; That equals to $141/kWh. In 2014, the Chevrolet Volt 16 kWh battery pack was seen sold at $2,994.64 or $187/kWh. In the same year, Nissan announced the battery replacement plan for LEAF. The cost is $5,499 including $1,000 for trading-in the old battery. The $6,499 total cost leads to $271/kWh. (More data on cell/pack price can be found at our homepage.)

The gap in battery cost can be partly filled by the batteries’ second-life applications.

EVs have stringent requirements on their batteries. To name a few – 1) EV batteries need to be weigh/space efficient to fit into a car, meaning high energy densities; 2) EV batteries need to be cycled in wide SOC windows (60-80%) to drive a long enough range on one charge; 3) EV batteries need to be able to deliver enough (like 70-80%) energy as battery ages, so drivers do not get angry with decreasing range; 4) EV batteries need to be able to deal with difficult load conditions like acceleration and fast charging.

That being said, end-of-life EV batteries are not dead batteries really. They can still serve well in less stringent conditions anywhere from huge MWh front-of-the-meter grid stationary storage to tiny portable power bank for your phone.

In any of these cases, high energy density is no long a must, batteries can be cycled in a narrow SOC window, batteries can retain less energy and the load conditions can be relatively mild and constant.

In November 2015, Daimler announced the plan to build a 13 MWh grid storage unit in Germany. It uses repurposed batteries from the electric car Daimler smart. The project was claimed to be the largest of its kind (with second-life batteries).

Nissan partners with Green Charge Networks to reuse its EV batteries for electrochemical energy storage (EES) applications. The behind-the-meter battery system can store electricity when the demand is low and produce electricity as the demand spikes. So users can save on demand charges. There was rumor that these old batteries would cost around $100/kWh.

Tesla reportedly has plans to give its EV batteries a second life as well. The residential energy storage product Powerwall sells for $3,000 per unit of 7 kWh. Can there be second-life batteries utilized?

For now, second-life applications can help reduce the price for battery replacement. How they can benefit EV buyers from the very beginning can be a quite interesting area to explore.

Moreover, battery reliability during the life span of an all-electric car or a plug-in hybrid lacks enough real-life data to support, since most of popular models came in after 2010. There were reports on cars like Nissan LEAF that the energy retention after a few years of driving was better than originally projected. Whether these cars need to replace the battery at all or not still would be an open question. And this would have an impact on how we see used electric cars.

It feels like electric car is but only a new technology, but also can change many things in our lives when they prevail.