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Three issues should occur for the EV revolution to be full — cheaper batteries, sooner charging batteries, and extra EV chargers that truly work. CATL and BYD are each on a path to lower battery costs this 12 months by as a lot as 50%, which means battery packs on the finish of 2024 may price half what they did on the finish of 2023.
CnEVPost stories that with a view to safe its market place, CATL is finding out manufacturing line assets and pushing for price reductions that might drive the value of its VDA spec lithium iron phosphate battery cells right down to RMB 0.4 per Wh. That interprets to $56.47 per kWh hour. At that value, a 60 kWh battery that prices producers $6,776.00 at this time will price simply $3,388 12 months from now, saving EV producers over $3,000 per car.
Is that fifty% much less? Not fairly, however Chinese language sources adopted by CnEVPost say that Cao Li, vice chairman of Leapmotor, believes the value of VDA battery cells his firm buys from CATL may drop additional to RMB 320/kWh. The drop in battery costs is eerily near a prediction made by Tony Seba a decade in the past.
Li-ion #batteries from CATL and BYD dropping as little as $56/kWh. ????
“At the moment, VDA-sized #LFPcells are promoting for lower than RMB 0.5/Wh [USD $69.53/kWh]. Leapmotor’s vice chairman Cao Li lately stated in an interview that the corporate’s procurement price for LFP cells has dropped… https://t.co/QasXsLvqtJ
— Tony Seba (@tonyseba) January 20, 2024
What Is A VDA Battery Cell?
Most of us right here at CleanTechnica are aware of cylindrical cells. Tesla has all the time favored cylindrical cells, beginning with the 18650 (18 mm in diameter and 65 mm lengthy) cells within the authentic Roadster and Mannequin S. Later, it moved to 2170 cells (21 mm in diameter and 70 mm lengthy) and is now producing 4680 cells.
The 46 mm diameter cells are quickly turning into the brand new trade commonplace, with BMW saying it should use them in several lengths in its upcoming Neue Klasse electrical automobiles. GM started by utilizing pouch cells for its a lot ballyhooed Ultium batteries however has now modified horses in midstream and switched to cylindrical cells.
VDA is a normal initially created in Germany for rectangular prismatic battery cells which can be 148 mm lengthy, 26.5 mm vast, and 91 mm excessive. The stories from Chinese language media declare that by this summer season, CATL will likely be delivering 173 Ah VDA-spec LFP cells with 2.2C quick charging to automakers at a median price of 0.4 RMB per Wh. Final 12 months presently, the price of LFP cells within the VDA format was 0.8 to 0.9 RMB per Wh. By August, it had dropped to 0.6 RMB per Wh.
The batteries will likely be utilized by numerous corporations in automobiles that promote for between RMB 100,000 and RMB 200,000 ($13,800 to $27,600). The two.2C charging price means they are often absolutely charged in half-hour or much less. “From the upstream format and the useful resource reserve of the fabric system, solely CATL could make 2C batteries decrease to a value level in the mean time,” Chinese language sources say.
BYD Will Match CATL
FinDreams, the battery manufacturing division of BYD, has issued an inner discover urging its groups to proceed to cut back prices. CATL at the moment is the world’s largest battery producer, with 37.4% of the worldwide market. FinDreams (BYD) is second with a 25.7% market share, in response to information launched January 9 by South Korean market researcher SNE Analysis.
Chinese language trade supply 36kr says FinDreams maximized value reductions in 2023 via means together with tender bidding, however the scope for price discount in present procurement stays big in response to that inner discover. In 2024, FinDreams will proceed to strengthen the administration of non-productive supplies and scale back prices, the discover stated.
Batteries have gone from being in tight provide a 12 months in the past — when the value of lithium spiked to stratospheric ranges — to being in oversupply at this time. Some within the battery trade imagine that costs beneath 0.4 RMB per Wh will depart battery makers with no revenue, however in a aggressive market it’s potential for them to realize market share at a loss, though that’s clearly not a long run technique.
Implications For The EV Revolution
There was a lot consternation and handwringing currently in regards to the state of the transition to electrical automobiles. The US and the EU have each backed off on their subsequent spherical of exhaust emissions requirements within the face of stress from automakers and fossil gas trade teams. GM and Ford are pushing again the timeline for introducing new battery-electric automobiles, notably pickup vehicles.
Mercedes has simply introduced it’s backing away from its pledge to build only electric cars by 2030, saying it could possibly’t make sufficient cash simply from promoting electrical automobiles. It now says infernal combustion engines will likely be a part of its marketing strategy till properly into the following decade.
The headlines counsel that customers are shedding curiosity in electrical automobiles, and there are a selection of causes for that. We had been advised 5 years in the past that EV costs would fall together with decreases in the price of batteries, however that hasn’t occurred. The value of electrical automobiles has remained stubbornly excessive regardless of decrease battery prices. Actually, in lots of circumstances, the value of recent electrical automobiles and vehicles has gone up moderately than down.
GM teased us with guarantees of inexpensive battery electrical variations of its Equinox and Blazer SUVs, however after they lastly arrived, they had been priced $5,000 to $15,000 larger than anticipated. Ford hiked the value of its hottest F-150 Lightning mannequin by $20,000 earlier than selecting solely a $10,000 improve. No surprise persons are shedding religion within the EV revolution. This isn’t the way in which issues had been alleged to be.
These days, there have been scary headlines in regards to the low-cost Chinese language electrical automobiles inbuilt Mexico which the Affiliation of American Producers calls an existential threat to American car companies and all the employees who help the auto trade. Capitalists all the time favor capitalism so long as they’re protected against competitors. Yeah, that’s illogical, however there you go. Ideology all the time yields to self curiosity.
The Takeaway
The upshot right here is that battery costs are certainly falling simply as Tony Seba predicted 10 years in the past. That’s nice information for the EV revolution. Within the last evaluation, decrease costs for electrical automobiles will do extra to make that revolution full than all of the mandates on the planet.
A number of the feedback to our story in regards to the AAM report counsel that not all Chinese language-made automobiles are as much as the requirements of high quality and reliability individuals count on and that’s on them. No one will purchase crappy automobiles it doesn’t matter what the value, so they should step up their recreation and make compelling electrical automobiles, not simply low-cost ones.
There isn’t a assure that the low battery costs accessible in China will translate to different markets, particularly the US which has erected a barrier to batteries made with supplies or parts sourced from Chinese language-owned corporations. That provision will defend America’s associates, however make it more durable to decrease battery costs sufficient to carry extra inexpensive electrical automobiles to American customers. There was great opposition to CATL constructing a battery factory in the US.
The takeaway right here appears to be that decrease battery costs from CATL and BYD will tremendously profit EV clients in China and different Asian international locations first, Europe second if the EU doesn’t erect commerce limitations to Chinese language made automobiles, and the US final, because of its protectionist stance.
Decrease battery costs are one half or the puzzle. 2.2C charging is a component strategy to the faster charging batteries we’d like with a view to make driving an EV extra handy. Charging infrastructure is getting higher however nonetheless a good distance from being sufficient. All of this implies the transition to electrical automobiles simply obtained a giant increase, however has a strategy to go earlier than it crosses the end line. Irrespective of the way you take a look at it, that is excellent news after all of the doom and gloom about electrical automobiles that has been within the information currently as legacy industries use each soiled trick within the e book (it’s a moderately massive e book) to decelerate the inevitable.
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