'

Cheap electric cars will be driven by supply chain expansion

A cheaper electric car will come as the result of high-volume manufacturing of lithium-ion batteries, not a new technology, according to a new report.

A cheaper electric car will come as the result of high-volume manufacturing of lithium-ion batteries, not a new technology, according to a new report.

Management consulting company PRTM on Monday said experts underestimate the projected demand of electric vehicles -- and those companies and nations that can ramp up production for batteries stand to profit as electric cars become cost competitive with gasoline-powered vehicles.

That's expected to happen in the next six to eight years across the globe, according to a PRTM representative quoted in a CNET report about the projection.

PRTM argues that plug-in vehicle volumes will ramp up significantly in 2016 in Europe and 2018 in the U.S. as costs approach gas-only cars.

The U.S. federal government last August announced a $2.4 billion investment in batteries that was matched by private companies.

The breakdown of those grants included:

  • $1.5 billion to U.S.-based manufacturers to produce batteries and their components and to expand battery recycling capacity.
  • $500 million to U.S.-based manufacturers to produce electric drive components for vehicles, including electric motors, power electronics, and other drive train components.
  • $400 million to buy, deploy and evaluate "thousands" of plug-in hybrid and all-electric vehicles for test demonstrations in several dozen locations, including the installation of electric charging infrastructure and education and workforce training to support a transition to advanced electric transportation systems.

Right now, lithium ion battery manufacturing is dominated by companies in Asia, particularly China.

A few more points from the PRTM forecast:

  • Technology advancements will not drastically affect prices until 2020.
  • Battery costs will go down by about half based on supply chain expansion.
  • Plug-in vehicles will represent about 10 percent of new cars sales.
  • The Nissan Leaf and Chevy Volt are still only attractive to early adopters and fleet operators.

This post was originally published on Smartplanet.com