Cost of Li-ion batteries in 2020 not low enough for mass adoption of EVs: report

Despite technology improvements and growing industry scale, Li-ion electric vehicle batteries will cost $397/kWh in 2020, falling short of the $150/kWh target needed to reach the mass market, say experts.

A report published today by Lux Research suggests that electric vehicles may be relegated to niche markets for the foreseeable future due to the high cost of lithium-ion (Li-ion) batteries.

According to Lux Research, while larger-scale production of Li-ion batteries will help reduce costs, the effect of scale-up and likely technology improvements will bring the nominal Li-ion electric vehicle battery pack cost to $397/kWh in 2020. That falls short of the $150/kWh target from the U.S. Advanced Battery Consortium (USABC) and is not enough to reach the mass market, the report suggests.

The key to growing the market is reducing the cost of Li-ion batteries, according to the Lux Research report. “Vehicle applications demand a different scale in both size and performance, and no other incumbent technology combines the power and energy performance of Li-ion batteries,” said Kevin See Ph.D., a Lux Research analyst and the lead author of the report: Searching for Innovations to Cut Li-ion Battery Costs.

“Plug-in vehicles’ fates are tied to the cost of Li-ion batteries, so developers need to focus on the innovations that have biggest impact on cost,” he added.

Upon studying the cost structure of Li-ion batteries, Lux Research concludes that to reduce the cost of Li-ion batteries and spur growth of the EV market, manufacturers should consider the following:

  • Materials improvement and scale are insufficient to cut costs. While scale does have a significant impact in driving costs down, it is not likely to lead to a disruptive drop in battery pack costs unless coupled with other innovations.
  • Cathodes remain the biggest target. Cathode capacity and voltage improvement hold much more value than anode innovation. In the optimal case, with a maximum voltage increase of 1V and capacity increase of 200 mAh/g, the nominal pack cost dropped 20 percent.
  • Look beyond Li-ion. Technologies such as Li-air, Mg-ion, Li-S and solid-state batteries push past the limitations of Li-ion batteries and achieve higher energy densities and specific energies. Each technology has its supporters -- PolyPlus and IBM for Li-air, Toyota for Mg-ion, Sion Power and BASF for Li-S and Sakti3 for solid state batteries -- but all face significant obstacles. A clear leading contender that can meet strict requirements on cycle life, power performance, and manufacturability has yet to emerge.

Li-ion batteries have been getting a bad wrap lately. Li-ion battery maker A123 Systems recently launched a campaign to replace defective batteries that are used in the sleek Fisker Karma EV. Fisker now has to deal with a second costly battery recall after the automaker preemptively recalled faulty A123 systems batteries late last year for posing a fire hazard.


Development boosts lithium-ion battery power by 8-fold Electric motorcycles rev up design and performance (w/photos) Giant futuristic batteries to power 2,000 households