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Perspective: Not all reductions in battery costs are found underneath the microscope

8 March 2011

Perspective by The Townsend Company

The one topic that all people involved in the electric vehicle industry agree on is that batteries cost too much. This has led to a wave of investment in material science developments by both governments and private investors alike over the past few years. Yet, when a wider perspective is taken to this issue, the active material content (anode and cathode) in an electric vehicle battery only constitutes towards 20% of the price, falling to less than 10% in hybrid applications.

Therefore, if we are really going to focus on reducing the price of batteries, a total battery system and not just cell material perspective needs to be taken and costs addressed that are not found beneath a microscope alone.

If we first consider the cost of a cell, the anode and cathode costs contribute toward approximately one-third of the total cell cost. The rest of the cost is a mixture of electro-chemical and electro-mechanical packaging: separators, electrolyte, coating foils and cell casing (pouch or can). In an EV application cells will constitute approximately 75% of the cost of a vehicle’s battery pack. Yet two-thirds of this cost is inactive material or cell packaging, which equates to half of the total cost of the vehicle’s battery system.

If we pause on this issue for a moment and look at the activities that are ongoing to improve the active to inactive cell material ratio, most of them continue to be under the microscope at the material science level. Lower-cost electrolytes, foils and separator material combinations continue to be sought. Larger-format cells are also becoming more prevalent with the aim to reduce cell casing and labor cost elements, but these are hindered by powertrain voltage and vehicle packaging requirements.

Yet although the inactive material in a cell represents the largest potential cost reduction opportunity, its biggest handicap is time. Once a breakthrough technology step has been found, it needs to be taken out of the lab and validated at a cell level, typically taking up to 18 months, assuming no set backs are found. Once validated at the cell level this then needs to be validated at a module and vehicle pack level, taking a further 18 to 36 months, meaning that a new development found today is four and a half years away from production. This is further complicated by the current market build out of billions of dollars in manufacturing equipment focused on high speed volume production of today’s technology that needs to be utilized to give a return on investment and could act as a further constraint to new cell tech.

Looking beyond the microscope presents a significant and shorter term opportunity to reduce costs. Non-cell pack costs represent between 25 - 75% of the total battery system cost in EV and HEV battery packs, respectively.

If we examine this, the two main cost drivers in the pack are the pack’s electronics and cells’ mechanical module costs at around 30% each of the total non-cell pack cost build-up.

The electronics include the body control module, current sense module and module balancing electronics. Although failsafe and complex in design to a great extent, these components are typically fabricated from the automotive commodity parts bins and represent a significant potential for cost reductions as volumes rise, designs mature and potential failure modes are eliminated. When combined with potentially less than a six-month lead time for introduction, a battery’s electronic and electrical components represent a significant opportunity to impact cost reductions.

Mechanical module costs, although significant, do not represent the same short term opportunity for cost reduction that a pack’s electronics represent. The module components provide the cell with its series and parallel configuration, thermal management and mechanical robustness. Modifications in this area typically tie back to the cell performance or pack’s durability resulting in extended, 18 month plus type validation programs for new ideas, with the module representing a mechanical, power and energy extension of the cell configured to support a vehicle’s packaging and powertrain requirement.

The next significant elements of a battery pack’s cost are represented by the wiring and enclosure.

The enclosure represents the more obvious of the two costs, encasing all of the battery pack components, modules and cells and providing a mechanical structure to support them and retain them within a vehicle. A number of material options are in use from resin transfer molds, sheet steel, aluminum and reinforced plastic components that each offer their own unique combination of packaging flexibility, strength, thermal and electrical insulation properties with associated tooling investment to obtain targeted production volume quantities.

Two factors will reduce costs in this area: production volume and mechanical engineering ingenuity. The later represents significant cost avoidance if a vehicle system approach is undertaken with the battery casing and the common scenario of a box in a box packaging avoided in favor of an optimized combined structural solution for the vehicle and battery pack.

Wiring represents 10 - 15% of the cost of a pack’s non-cell components; cost drivers include copper (material), pack layout and external connector positioning. Designs can be optimized to reduce wiring costs; however, they rarely are with vehicle packaging and systems architecture design and layouts taking precedence. The cost of the battery packs wire harness is often lost as it’s considered a battery and not a vehicle harness cost in the eyes of a vehicle manufacturer. However, this hidden cost needs to be recognized and considered during a vehicle’s electrical architecture design and requires advanced collaboration between the battery pack designer and the vehicles electrical system architect.

The other factors in wire harness cost are labor and volume. A battery pack’s wire harness cost is yet far removed from that of a typical vehicle’s harness cost as so far production volumes have typically been in hundreds and not tens of thousands of units. As electric vehicle volumes rise, this cost should also reduce significantly.

The last two significant non-cell pack cost drivers are thermal management and connectors.

Thermal management, especially relevant in HEV packs, can take a number of forms traditionally split by air or liquid and external or closed-loop driven. An external air feed represents the least cost and a closed-loop liquid system represents the most costly.

The need for the type of thermal management system is entirely driven by the cell chemistry and user application. Certainly cells with low internal resistance and low self heating properties have a thermal system cost advantage over those that don’t; likewise, cells that can still operate at low, sub -25 °C conditions can possibly avoid the need for a heating element. Therefore, the thermal management system cost can greatly vary but has a direct link to the core cell chemistry.

Although unique system solutions are being developed, this cost will be driven in its majority by developments under the microscope. As a side note, the unique costs of a packs thermal management requirements are often lost in $/Wh chemistry comparisons, as an over-simplified “one cost” for all is generally applied, which is simply not true and can often result in hundreds of dollars of cost add to system.

One of the most surprisingly problematic areas of supply and cost is the high-voltage connector set. With prices anywhere from the tens to hundreds of dollars a pack, this set offers a very disproportional cost-to-price ratio for what is basically copper-flashed plate in a plastic or cast molding. These are not the connectors that the vehicle user plugs into, but the internal connections from the battery to a vehicle. Unfortunately, the choice of high-voltage connector options is currently limited in the market, presenting both opportunities for new entrants and economies of scale for cost reductions as prices increase.

In summary, material science developments still represent the largest potential cost-reduction opportunity to increase the ratio of active to inactive cost within a cell and pack, whether it be by increasing a material’s power or energy densities, reducing a cell’s need for support components, or improving its thermal and mechanical robustness. However, time and changes to manufacturing process costs remain limiting factors.

Beyond these “microscope-driven” advancements, the majority of a pack’s non-cell components have yet to be cost-optimized. The pack’s electrical and electronic controls represent a significant and possibly short-term cost-saving opportunity. As vehicles are designed from the ground up, rather than adopted for conversion, further strides can be made in optimizing mechanical pack and thermal management costs; lastly but by no means least, purchasing and commoditization pressure needs to come to bear on wiring and connector costs.

About The Townsend Company

The Townsend Company LLC is a consultation and business development practice to help companies wanting to enter, grow or become more profitable in the alternative energy market. Prior to founding the company, Glynne Townsend, President and CEO, led the revenue growth for A123 Systems in the automotive and grid markets. For additional information, please contact: info@thetownsendco.com

March 8, 2011 in Batteries, Perspective | Permalink | Comments (21) | TrackBack (0)

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Comments

A wonderfully informative article. Many thanks.

Very well written. Excellent points that lends, in my opinion, a light of optimism onto the near and medium term future of electric vehicles.

Awesome article!!!

Very interesting and full of wonderful perspectives. All the non-cell-chemistry parts mentioned in this article are exactly the kinds of things the automotive industry is expert at making cheaper.

About the wire harness and thermal management, I doubt car manufacturers are too keen on integrating a certain battery type too much with the core of the car. Don't forget, hundreds of millions of dollars go into tooling of cheap mass production of exactly this part. So it has to remain the same for the lifetime of a particular car model to get return on investment. Otherwise, cars will get more expensive.

The whole article points toward great potential cost reductions for BEVs because these can better be designed 'from the bottom up' around the battery and achieve all the synergies and savings mentioned in this article. For HEV's, power control, wiring, connections, double packaging should become less expensive and significantly reduce the added costs of a hybrid system.

Standardization and mass production are unavoidable if cost is to be reduced.

Standard black boxes mass produced by third parties and joint together with standard mass produced connectors and cable harnesses is what was used in the electronics industry to lower cost.

Mass produced standardized in-wheel motors, battery modules and associated connectors and electronic controllers is a possibility if not a must to reduce electrified vehicle cost.

ZEBRA batteries are well tested and it is hard to beat cooling advantage of being able to blow the hottest desert air or the coolest Polar blast through them if cooling is actually necessary. They may be less power efficient than other batteries in automobiles that sit unused for weeks at a time. The BETA RD site contained a cost analysis which showed that the material costs were a small fraction of the cost of making the unit. Steel, iron, aluminum, common salt and nickle were the main components.

ZEBRA batteries, when cooled have the unusual feature of keeping a charge for thousands of years if necessary, and it is recovered with simple heating. No doubt high power resistors could be used for fast recovery heating. This could be used for battery swapping.

The reduced lead batteries of Firefly, EFFPOWER, and Atraverda as well as some other batteries are very useful in plug in hybrid vehicles as demonstrated by Ron Gremban and Felix of Calcars especially in the later version invented by Gremban that retained the use of the original battery of the Prius. Enginer sells a version of this. Two very high power but inexpensive converters could move the energy back and forth between batteries of different voltages. ..HG..

This is such a nice & knowledge full topic.The things given are unanimous and needs to be appreciated by everyone.
---------------------------------------------------------
chocolates

With their efficiency approaching 99% and cost potentially going down at a fast rate, converters are not and will not be a major challenge.

R & D and future technologies will come to the rescue and the world will have affordable high energy density storage units by 2020 or shortly thereafter. It is just a matter of time.

Meanwhile, 50+ mpg HEVs are a good start and could be part of the solution for the next 10 years or so.

Standardization really is the key. It *almost* doesn't matter what standard is adapted so long as ONE standard is adapted. The ATX standard is an excellent example as is the AR15/M16/M4 platform.

I'm going to let a cat's tail out of the bag: I work for a group of REITs (essentially commercial shopping center holding companies) in the southeastern U.S. and we are currently evaluating different charging standards. We should reach a decision in the next month or two at which point I'll contact Mike with our press release. Big stuff ahead for EVs ;)

I'd also like to add a policy suggestion for congress: in lieu of raising CAFE requirements, have a PHEV/EV mandate whereby all new vehicles are capable of traveling a certain distance on electricity alone. Perhaps 4 miles. This would have several effects:

1. it would effectively raise CAFE standards
2. it would put all auto manufacturers on an equal footing. We wouldn't be mandating efficiency, just the ability to use an alternate source of fuel. Inefficient body designs (SUVs, pickups, muscle cars) would still be sellable so long as they could muster a 4 mile drive at 30mph or so.
3. it would force the price of HEVs, PHEVs, and EVs lower as manufacturers actively sought to cut costs pursuing some of the courses of action mentioned in this article.
4. it would drastically lower oil prices and minimize price spikes as market penetration occurred. One has to remember that price isn't just a reflection of supply and demand but also perceived supply and demand. If OPEC has the perception that we can muddle along with somewhat neutered PHEVs, they won't have the incentive to cut production in an attempt to prop up prices. Supply disruptions wouldn't be as catastrophic... again, we could muddle along with a neutered PHEVs.

Initially, vehicle prices would spike. However, within a short period of time, manufacturers would create their own standards for things such as batteries, wiring harnesses, AC compressors, motors/generators, and range extenders. I'd be willing to bet that, in the intermediate term (~5years) vehicle prices would end up being the same or even lower than pre-legislation levels as a result of such broad standardization even if said standardization only occurs within discreet holding companies (Volks/audi/porsche, GM, Ford, etc.)

Greenplease,
I have a better idea. How about we get the government out of CAFE regulation and let the consumer decide what is the best for them. People that can afford a big vehicle, or need a big vehicle can decide for themselves whether or not they can afford the fuel. If they can, they can buy whatever they want. In rural areas, I've never seen a Prius haul a cattle trailer, and can't see having a Class 8 truck have to pull an 80,000 pound trailer 4 miles on battery power alone. I personally would buy a some type of diesel hybrid plug in that could charge from my 9kW solar array. I have the panels, and an organic chemistry degree so I can do the simple transesterification of fats to make my own diesel fuel if economically feasable at the time. Others may not have that advantage. I just don't want a bunch of overpaid government bureaucrats being hired to go around wasting taxpayer money to make sure this car company does this or that other than some standardization issues, like all manufacturers using the same plug design for their charging adapter. The business of energy companies is to deliver energy, lets get out of their way and let them do it. The US does it cleaner and better than everyone else in the world. I want the US making fuel cleanly from their coal, drilling in ANWR, drilling wherever cleanly. I live near west central Florida beaches, and not one drop of the BP spill hit the shores of my county. Why is it OK for the Venezulans/Iranians to use their carbon, but not us? Additionally, I really don't want my car "neutered" for any reason, I don't want to drive at 30 mph where the speed limit is 55 or higher. It would tick off everybody behind me. I would take your bet about the prices being lower too. All regulation does is add to the price. While some regulation is necessary, going overboard with it is not.

CM: We are the major polluters (at 20+ tonnes/year/per capita) and the major per capita energy and liquid fuel users. We are not at all as clean as we think we are. We can't tell or ask the world to do as we did. That would be a major catastrophe.

We can't rely on vehicle manufacturers to build cleaner more efficient cars. It is not in their interest to do so. They don't really care as long as the profit margin is there.

Health, safety and security cannot be left to private enterprise unless very strict guide posts are implemented.

GreenPlease, excellent suggestions.

HD,

Statistics are for liars. Why didn't you use the tons/year/GNP statistic where you will find we are among the least polluters. Any statistic where you compare per capita you will find we are high, but our per capita produces at a exponential level of efficiency higher than the Chinese or any other nations per capita. You didn't see the United States have to stop traffic in an Olympic host city 6 weeks before a the event or seed clouds to clean the air. I don't have a problem with efficiency or cleanliness, after all I do have a 9kW solar PV system and am putting in solar hot water even as we speak, but a blanket rule to make any vehicle go 4 miles on battery alone is over-regulating. Just the size of the battery to make an 18 wheeler thats fully loaded to 60-80,000 lbs. go 4 miles battery only is unrealistic and probably unaffordable to the fleet operator and will make one of the most efficient transporters of our cargo go out of business or have rates for cargo delivery rise dramatically. (Unattended consequence nobody thinks about when proposing these ridiculous regulations) I personally do not want to "neuter" my car to only go at 30 miles per hour for some unrealistic standard some greenie is shoving down my throat. I can guarantee if any automaker produces a decent plug-in diesel or gas hybrid that's even remotely affordable, I'd buy one. At $40+ thousand, the Volt isn't it, despite any bribes the govt gives me from my own pocket. In the mean time, I'll keep my 40+ mpg at 80 mph Passat diesel until they do. I think that would be better than an SUV that gets 20 mpg, but can go 4 miles on electric only when "neutered" at 30 mph.

@Coke Machine:

It sounds like we're not far from each other!

It appears that I didn't make my original post clear. First, it was a

    capability
mandate not standards setting by the government. Second, it was only targeted towards light duty vehicles. Class 8 trucks have very efficient drive trains already. The lowest hanging fruit on that tree would be bolt-on aerodynamics which provide such a high return on investment (>35%) that private markets should readily fund their adoption.

The intent of my proposal was to mandate that new light duty vehicles be able to travel a minimum of 4 miles at a minimum of 30 miles an hour (along the lines of the current Prius if I'm not mistaken).

I sympathize with your views with regards to economics. For what its worth, I hold an undergraduate's degree in economics, a master's degree in predictive analytics, and am generally conservative/rightward leaning when it comes to my economic views. However, the electrification of vehicles presents a chicken and egg problem, one that is not solved swiftly by private markets.

Some consumers are willing to purchase EVs or PHEVs that are slower and more expensive to operate than their petrol powered counterparts simply for the luxury of knowing that they're not using oil (at least not directly). In a functioning market, they'd buy PHEVs in order to send a market signal to producers. However, that option isn't really viable at the moment (the Volt being a recent exception).

Think about pollution regulation. Consumers might express a preference for clean air but how could they do this in a reasonable manner? It's not like they had the option of buying electricity from coal fired power plants with scrubbers as opposed to a power plant that did not have scrubbers. There was no way for them to pay the extra $0.015/kw/h in order to reduce particulate emissions from said power plants by 90%. The only option to achieve consumer's desires in a reasonable fashion was through government regulation and by the government mandating a

    capability
not a technology or a technology standard.

In the case of light duty vehicles, I'm proposing that the government mandate a

    capability
of driving a minimum of 4 miles under electric power alone at a minimum of 30 miles per hour. With the entire new car fleet now on the same terms, consumers can express their preference for HEVs, PHEVs, or pure EVs as well as their perception of electric range utility. Within a decade, the U.S. would have a functioning market that efficiently considered the costs and benefits of both batteries and petrol fuel without being held hostage to foreign oil producers or natural geological factors (peak oil).

Wow, guess I should have hit "preview". I was trying to underline "capability".... sorry for that.

Coke Machine,

US auto manufacturers will NEVER do the right thing for consumers, not even five dollar($5) seat belts, without being forced by law. They will crush laws, EVs, mass transit, - whatever for a short term buck.

This is historic and absolutely clear. Even now, plastic fuel lines are being used to impede possible flex fuel conversions and US auto maker mpg always lags behind the rest of the world.

Soon, gas will cross $4+/gallon again and we will be stuck with the same arrogant, inbred, teen-per-gallon SUV bankrupts who begged/stole $70 billion in bailouts already. Check the 2/3rds Chevy/GMC truck/SUV product offering.

Why should all Americans subsidize oil wars for others US auto/SUV/muscle car fuel waste.

Kelly,

Gas doesn't have to cost $4.00 per gallon. We have plenty of oil here. Let energy companies use our resources, but use them cleanly. The technology exists. SUV's were built because that's what the consumer wanted. If we had 500 nuclear power plants and virtually limitless clean cheap electricity, they'd be building electric cars that got over 200 miles per charge like the Tesla, quick recharge stations, and people would be buying them left and right because they're cheaper to operate. The mideast's best export then would be sand. In the mean time, until the greenies realize nuclear is clean, we have to use our own sources of energy such as coal, ANWR, F-T diesel from coal, tar sands, shale oil, etc. Keep the money in America.

Waste that is deadly for thousands of years is not clean.

If we had been reprocessing fuel rods like we were suppossed to, we wouldn't be having the problem in Japan right now either worrying about cooling spent fuel, but it would have been reprocessed, off site, and not needed to be cooled, reused and the "real" waste vitrified. Do you not think the same reaction takes place in nature? Don't fault Nuclear power for bad decisions by stupid engineers. What id10t would build a reactor on a fault line anyway, or anyplace where a tsunami would hit it. Hopefully new plants will have some sort of seismic detector that when a certain level is reached, the control rods drop to stop the chain reaction.

An interesting özel güvenlik şirketleri an informative çay bardağı post thanks

in a matter of very matbaa useful and interesting at the same time thank you very much.

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