5 Reasons why EV batteries are expensive

Purchasing an electric vehicle (EV) is not cheap. The additional cost of buying an all-electric car instead of a conventional vehicle is mostly because of the expensive battery used in the former. While improved battery materials with higher energy density and better production processes are expected to considerably bring down EV costs by 2030, the fact remains that all-electric cars are still on the expensive side, compared to the conventional ones.
So why are EV batteries expensive? Let’s find out.

1. EV batteries comprise several parts

The battery pack of an EV comprises several parts. Besides lithium-ion cells, metals like cobalt, nickel, and manganese are used to produce an electric car’s battery. The available technology, at least for the time being, doesn’t allow mass production of these batteries. Lithium-ion batteries that haul an EV, due to the absence of mass-scale production, command a higher price than the usual lead-acid batteries. The positive side is that lithium-ion batteries last longer. The battery of an all-electric car may last up to 200,000 miles which is higher than an average fossil fuel-powered vehicle. This leads to lower running costs of EVs.

2. They are heavy

Lithium-ion batteries are big and heavy. The battery pack of the all-electric Tesla Model S weighs nearly 1,200 pounds. While the estimated costs vary, it is believed that the battery takes about PHP 5,050 for every kWh or nearly 50,500 for 100kWh in the Tesla Model S. It approximately translates to PHP 400 for each pound. The high cost of EV batteries is because of their bigger weight and size.

3. Limited supply chain

One of the biggest reasons behind EV batteries being expensive is the lack of a proper supply chain. In countries like the Philippines, where the proliferation of EVs is largely limited to public transport and e-tricycles, the supply of batteries is even more limited. Things, however, have started to improve. Over the last decade, the average global cost of an EV battery has come down by almost 85 percent from $1,160 (PHP 58,500) per kWh in 2010, to $176 (PHP 8,900) in 2018. Automobile manufacturers are embracing newer technologies and expanding their supply chains internationally. The price of EV batteries is expected to go down when technology becomes more adaptable.

4. Lack of competition

While it is undeniable that EVs are the future, most countries, including the Philippines don’t have enough manufacturers of all-electric cars. Lexus, Honda, Toyota are the three major companies manufacturing EVs in the Philippines. Most manufacturers are still talking about introducing EVs without actually entering the manufacturing process. Mass production warrants affordable and competitive pricing that is still a few years away. Manufacturers are still planning to go all-electric by the end of this decade and that would further lend economies of scale.

5. Dependency on imports

The Philippines currently has 28 companies manufacturing various types of EVs. There are 11 components and parts manufacturers and seven importers. The battery units are mostly imported from China since the Philippines still doesn’t have local manufacturers. Unless the production is localized, the price of lithium-ion batteries is unlikely to come down.

Carmakers and battery manufacturers have pegged that solid-state batteries could pretty much solve all the problems and make EVs far more affordable. A solid-state battery has enormous capacity and allows an EV to return a mileage of over 1,000 miles. The charging time of such a battery is at par with the refueling time of a conventional car. Solid-state batteries, with economies of scale, are expected to be inexpensive. More production would lead to a further reduction in costs. A solid-state battery, at the same time, is lighter in weight. They are also safe, courtesy of their ‘solid’ construction.

Also Read: 7 Common electric car myths busted