## PRTM: Operational Gains Can Help Drive Li-ion Cost Reduction Exceeding 50% by 2020, with Plug-in Vehicle Adoption of 10%

##### 17 January 2010

A series of recent reports—one from the National Research Council (NRC) (earlier post) and another from the Boston Consulting Group (earlier post)—concluded that an expected continuing high cost of lithium-ion batteries will dampen mass market adoption of plug-in vehicles.

However, Oliver Hazimeh, Director and head of the global e-Mobility Practice at PRTM, a global management consulting firm, suggests that total lithium-ion battery cost reductions exceeding 50% by 2020 are feasible without technology breakthroughs, primarily through operational gains, assuming EV adoption of approximately 10% of new vehicles sold by 2020 to support volume manufacturing. (PRTM contributed to the Electrification Roadmap released last November by the Electrification Coalition. Earlier post.)

Total cost of ownership parity, infrastructure availability and additional government environmental policies will drive plug-in vehicle adoption of more than 10% by 2020, Hazimeh says.

The majority of these battery cost reductions can be achieved through optimizing design and operations across areas including production/manufacturing, supply chain and product development:

• Production/Manufacturing Process Optimization: As battery production volumes increase, process optimization will drive improvements in production yield rates. Coupled with scale efficiencies that producers will achieve as they supply packs in volumes exceeding 500,000 units per year and cells in volumes exceeding 200 million units per year, PRTM expects that production process optimization alone will yield a 20-25% reduction in battery costs by 2020, Hazimeh says.

• Supply Chain Design: Another example of operational enhancements expected to yield significant improvement in battery costs is in the extended supply chain. Cell manufacturers, for example, will likely see 10-15% cost reductions through pooling material spends and optimizing the design of their supply chains in phases as volumes increase, according to PRTM.

• Product Complexity and Design: As more OEMs release an increasing number of electric vehicles into the market, optimization of the design platform will reduce product complexity, which will further reduce battery costs. During this early ramp-up phase, a number of different cell and pack design platforms will emerge due to unique OEM and vehicle requirements. However, Hazimeh says, as de facto standards emerge, battery producers will optimize their design platforms, which will drive additional production and supply chain benefits with the potential of additional cost reductions of up to 10%.

On the product design front, ongoing innovation and improvements in material advancement and battery cell and pack design to increase battery performance and reduce functional cost will yield an additional 10% in cost reduction.

PRTM’s analysis does not factor in additional reductions that could be created by local government manufacturing incentives.

10% of US Drivers Willing to Consider Plug-in Purchase

Separately, a recent survey by Ernst & Young’s Global Automotive Center found that more than 10% of US drivers would consider purchasing a plug-in hybrid or electric vehicle. The report canvassed the views of a thousand American licensed drivers to gauge consumer awareness and interest of plug-in hybrid and electric vehicles in the market.

Based on this sample, this figure would equate to approximately 20 million American drivers who are favorable towards purchasing plug-in hybrid and electric vehicles. The survey is part of Ernst & Young’s advanced vehicle powertrain initiative, which focuses on the business opportunities and issues companies face in the development of alternative transportation solutions.

Mike Hanley, Ernst & Young LLP, Global Automotive Leader, commented that although only 10% of the drivers responded positively to purchasing plug-in hybrid or electric vehicles, for a powertrain technology which is not yet widely available, it is a significant number which should not be ignored.

As the survey suggests, electric vehicles have an opportunity to make a significant entrance into the US public consciousness over the next few years. Even if only a small portion of the 10% of survey respondents who said they would consider a plug-in hybrid or electric vehicle when introduced are serious, there would still be more than enough demand to sell out the 2010 and 2011 production runs of the major and new manufacturers, while buying crucial time to build out infrastructure and increase public awareness.

—Mike Hanley

Some of the biggest challenges highlighted in the survey for advancing the popularity of new powertrain technologies from the niche into the mainstream are access to charging stations, battery driving range and vehicle costs.

While there are clear barriers to consumers fully embracing these technologies, 34% of survey participants said they would subsidize local charging stations, further illustrating that a significant number of drivers recognize the future benefits of plug-in hybrid and electric vehicles. Other key findings of the survey included:

• Public awareness of emerging powertrain technologies remains weak across the US.

• Not many consumers are willing to embrace the new technology prior to it being well-established in the market.

• No other plug-in hybrid and electric vehicle incentive or benefit is considered nearly as important as saving money on fuel.

• Among several considerations, access to charging stations, battery driving range and vehicle cost are by far the three most significant consumer concerns.

Much more realistic evalution of PHEVs potential by 2020.

With due consideration to technology evolution and manufacturing mass productivity gain in the next 10 years, batteries price could fall by much more than the expected 50%. Future batteries cost, using cheaper materials, may fall by as much as 75% by 2020 due to increased demand and massive prodduction in lower labour cost countries. That's what happened to cameras lithium batteries price in the last 5 years.

Harvey

No It will not, Lithium production won't be able to keep pace with car production beyond 5%. These global consulting firms know nothing about batteries, nothing.

Tre...

Post lithium batteries will be around by 2020.

TreeHugger,

Lithium is very common. It is 6% of the world's crust and much more common than Aluminum and other elements.

It will have no problem raising production to whatever demand occurs. Despite the constant Cassandras who always talk of "running out" of many materials, and are always wrong. Educated, but intrinsically wrong, People like Obamacites John Holdren and Paul Erlich.

Julian Simon's wager underlined and demonstrated that there is no limit on the ingenuity and productivity of Man in producing a substance, when qualified demand exists. Meanwhile constantly offering the product at more and more inexpensive prices.

http://www.evworld.com/article.cfm?storyid=1434

The World's most prolific demand imaginable, is already available in proven reserves of Lithium are mostly already developed, and shut-in in the USA. Bringing mothballed mines back into production is pretty easy.

These mines very large in potential volume, but of lower richness, provided most of th world's Lithium until the Atacama brines were discovered. The Lithium miners shut-in their US mines, to exploit those South American brines, that are not extremely large in volume, but very rich.

According to Chemical Rubber Company's book, Aluminum is up to nearly twenty times more concentrated in the ocean than lithium which is available only as one gram in ten million grams of sea water. But aluminum is the third most abundant element in the earths crust with 81,300 grams per metric tonne compared to lithiums 65 grams per metric tonne, or aluminum is over 1200 times as abundant than lithium.

Sodium-Nickel batteries have about equal or better performance than lithium batteries and are less complicated to make than lithium batteries and have no danger of fire and can be cooled with just air-flow anywhere they are operated. General Electric has just received development money to speed up their proposed production of such batteries that have been tested in automobiles for about twenty years. MES-DEA has produced such batteries for several years in their new factory and provided units for GE to test in hybrid mining trucks and rail locomotives. A study showed that the cost of such batteries can be reduced by a factor of 4 or more with simple automated mass production.

In any case, plug-in-hybrid cars with cheap batteries are the answer to providing widespread acceptance of electric cars by reducing the battery cost and the cost of the automobile.

The motor and electronic drive costs must also be reduced by mass production and reductions in peak performance that is not needed for most uses. High performance must be eliminated by law in favor of efficiency and price in cars that are subsidised by governments in any way.

The advances in lead batteries made in the last twenty years and future advances make them suitable for cheap plug-in-hybrid automobile operation for most automobile users.

The EFFPOWER battery design allows for a cheap hybrid lead battery car. Modifying the battery for higher energy or just adding a higher energy battery would make it a good plug in hybrid car system. The Prius battery could be replaced today with an EFFPOWER unit plus a Zebra battery that would give a hundred miles of travel on city streets with little or no gasoline use.

The "Enginer" system for making a plug-in-hybrid Prius could also be used with the ZEBRA battery today for long range electric travel. The "Enginer" system can also be used with present OPTIMA deep-cycle lead batteries at lower costs. Ron Gremban of CALCARS invented an early version of the "Enginer" system several years ago.

The Firefly batteries will make lead batteries more reliable and more suited for automobiles, but lead batteries are already suited for such use as proved by AC Propulsion over ten years ago as well as the EV1. The secret, as always, is a small range extender engine. OPOC is an example of such a thing but even cheaper and lighter weight units can be used. ..HG..

Panasonic has stated that they will be able to produce lithium-ion batteries for half the present cost because they can use existing technology and manufacturing facilities. And they can cut the cost most likely by 2014.

http://www.reuters.com/article/idUST21755220091001

Couple that with their announcement of much higher capacity lithium-ion batteries coming to market and one can see that today's EV reality is not the reality of even five years from now.

(One source of concentrated lithium is the discharge water from geothermal plants near the Salton Sea, CA. And we used to process lithium in North Carolina and Canada before China entered the processing market and undercut other suppliers. There's not that much lithium in a battery pack, we have lots of places to extract it, and it can be recycled.)

Mister Stan Peterson you should do your research, Lithium is far less abundant than what you think.

"According to the Handbook of Lithium and Natural Calcium, "Lithium is a comparatively rare element, although it is found in many rocks and some brines, but always in very low concentrations. There are a fairly large number of both lithium mineral and brine deposits but only comparatively a few of them are of actual or potential commercial value. Many are very small, others are too low in grade."[37] At 20 mg lithium per kg of Earth's crust [38], lithium is the 25th most abundant element. Nickel and lead have the about the same abundance."

the reserve base is estimated at 11 millions tonnes certainly not enough to power the world fleet with batteries. Those who think that we will extract the Lithium from sea water are the same who think that we will extract uranium from sea water. By the way if we extract all the gold from sea water we would make every body rich...

So in clear Msr Stan Peterson , all of your statements are BS or worse intentionally wrong.

Harvey it seems to me that you read to much "Alice in the wonderland"

Msr Henry Gibson

You are getting heavy with your Zebra battery that nobody except you is considering for car. As for Firefly, pfff their announcement has never materialized, and it reflect what is going to happen withe battery tech, plenty of speculative claims and promise, but nothing real.

Mster Bob Wallace
People will dream of EV but once they discover their limitations they will reject them unless they have really no other choice.

Treehugger

What limitations will they discover that they don't already know? The limited range and long charge times have been hammered in by Jeremy Clarkson c.s. So much, that many people will actually discover EV's have less limitations than they thought.

You would be right if the EV didn't have some advantages to offer against those limitations, like silent operation, no emissions and home charging. Many people (myself included) will find that these outweigh the drawbacks. At first the EV will only be bought by people that do not bother about the limitations. Even if that is only 5%, then still the market is huge.

As far as I'm concerned the only limitations right now are price and availability of fast charge points.

The problems peak oil as well as peak lithium raise is not that oil or lithium or other resources will run out its that the price of mining them will rise to economically damaging levels. We could mine sea water of lithium but at what cost per gram of lithium?

Anne

I don't dismiss the fact that EV as clear advantages compared to ICE powered vehicles. like zero emissions and low maintenance (except recharging the battery every day). But the range anxiety will be a big issue, motivated green people like you will cope with it, but I am afraid the vast majority of people will not sink 20K in a vehicle they can't count on. The range is a problem not only because it is limited but more because you never know when you will get stuck. Like in cold days for examples the range you are used to will be cut by 30% then you will be stuck where the day before you were ok and that will be difficult to handle in my view. But I don't pretend to be the Oracle of EV, let's wait and see but let's have reasonable expectations.

Ben you are exactly right, the problem of Li is not its abundance but the fact that it is very soluble in water so most of the Li on earth is dissolved in sea water, and very few concentrated mines exist contrary to other metal with comparable abundance. That might be frustrated but that's what it is.

Like in cold days for examples the range you are used to will be cut by 30% then you will be stuck where the day before you were ok and that will be difficult to handle in my view...

Only if the range you need to drive and the range your vehicle is capable of are so close that 30% is the difference between making it there and not... In that case, I don't think EV is the right answer for you anyway.

In the winter, when oxygenated gas is put in all the pumps (Oct. 1 to Mar 31 roughly for my area) my fuel economy takes a 10% hit as is (also from extended cold start running), yet I'm able to cope. Granted 10% is far different from 30%, it is still a hit on my range that is utterly meaningless to me other than the amount of money that comes out of my pocket.

Like in cold days for examples the range you are used to will be cut by 30% then you will be stuck where the day before you were ok and that will be difficult to handle in my view...

What is the deal with range anxiety? Why would drivers not bother to look at their "fuel" gauge on EV's, but they manage to remember to do this with a gas powered car? Why would you ever run out of juice anyways, with 1/2 hour high capacity quick charge stations to be popping up all over the place around cities and along highways? If you want to go off grid then rent a genset trailer, it really is a no brainer. All it requires is a slight shift in the way drivers think. Range anxiety is only for Jeremy Clarkson hysterians and will soon disappear in a couple years when EV's become mainstream.

And you aren't going to lose 30% range in the cold, more like 10%. And you wouldn't be using your EV for your commute if its range is within 20% of your commute distance anyways. The only time a reduced range will come up is if you're on a trip somewhere, in which case you are going to have to go to the "gas" station to charge up every 150 km anyways, so what's the big deal?

Batteries only suffer in cold weather when they are left to sit doing nothing. When they're being charged or used they generate their own internal heat; it's that well known ineffiency "problem" which the naysays keep harping on. The charge/discharge efficiency of even a good battery is only 85%. This means 15%[or more] is put out as heat. If your battery pack is inside an insulated space, like a battery box or under the seats in the passenger compartment and you leave it on the charger when you're not using it your range should not suffer.

It all comes down to good design: If your BEV range does suffer in cold weather it's not the fault of the idea of EVs, it's that you've bought a lemon.

I like Stan's phrase "qualified demand".  If you're not "qualified" to demand something, you have to depend on charity or just do without (even if that means dying).  For instance, even before the earthquake a huge number of Haitians were not part of the "qualified demand" for food and ate only because of the World Food Program.  This has some major implications for finite and depleting resources.  Do you think the USA is going to get charitable contributions of oil as the world supply gets smaller every year?  Dream on.

Resources which are abundant but diffuse don't have issues of final depletion.  The cost of lithium is a tiny part of Li-ion cells, and at 80 grams per kWh it can go up to a dollar a gram before it becomes a large factor.  At current Li2CO3 prices of $5200/ton we're paying 0.275 CENTS per gram, so I'd say this isn't something we need to worry about for a long time. Engineer Ok if the price of lithium is negligible in the cost of the batteries that leave us margin to extract if from low concentration source like granite, and if recycled the cost is also an investment. But the problem then is to reach a decent production flow when extracting lithium from sources that contain it in the 100 PPM range That is the big problem and that is a down tricky one that we will face as soon as we produce 5millions EV /year Marc 1/2 hour quick charging station ? honestly is it practical ? I don't think so. Patrick, the Nissan Leaf will be put on the market with a commercial range of 100miles, so means in practice you'll have to take a conservative margin if you don't want to get stuck, cold weather, aggressive driving, more load on board, head wind, aging batteries, change in your plans (do you always exactly drive what you planned to do?), deviation of your road because accident, I am pretty sure that people will get much less than the claimed 100 miles anyway. 1/2 hour charge stations are totally practical, Nissan is actually working with cities to install them. That's later this year! Sure, the Leaf only has 100 miles, but it doesn't initially have to satisfy every driver's needs, only 10% of them. In 5 years Nissan will swap your battery for one with 200 mile range and it won't even be an issue since this will satisfy 50% of drivers. "in practice you'll have to take a conservative margin if you don't want to get stuck, cold weather, aggressive driving, more load on board, head wind, aging batteries, change in your plans" How is that different with an ICE? will see for the 200 miles swap... the difference with an ICE is that you can refill in 5 mn, and there is station every where. with the conservative margin for an ICE still leaves you 300 miles of range, when the EV it is barely 50 miles which makes the world a LOT smaller. 1/2hrs station is not practical, first of all no battery can do that yet, 2nd if requires 1/2 hrs to refill, then you will never find an available station, because it will be always busy. sure you can argue that even with all these limitations there is still a demand, but I think it is a niche market. You know in france there have been experiences of EV electric cars at the french post mail, after 6 months they gave up on the experience, why bother when you have ICE that are far more practical. All these projections that the EV will flood the market assume that the ICE powered cars won't progress which is utterly wrong. Renault is putting a small car on the market that get 65MPG and is not range limited. 70-80MPG ICE cars are round the corner even with a gas at 4-5$ why bother with an EV ?

EVs will come but in a very incremental way,

Yes, EVs will come incrementally, and may even be supplanted by something else before they overtake the evolving ICE.

Treehugger - Bolivia alone has enough lithium for 4.8 billion EVs. Do you think we'll have one car for every two people when the world's population peaks at 9 billion or so?

http://www.bloomberg.com/apps/news?pid=20601109&sid=aVqbD6T3XJeM

Remember, it's the world's "largest" deposit. Not the world's "only" deposit.

And remember, it's recyclable. It is not consumed.

The Nissan Leaf has an 100 mile range and can be 80% recharged in 20-30 minutes. With the new Panasonic batteries coming to market that range should be extended past 150 miles.

While the Leaf might not be an appropriate vehicle for people who often drive more than 150 miles per day it should be just fine for those who take the occasional longer trip. Think about driving 150 miles, taking a half hour break, driving another 120 miles, half hour break, then another 120 miles.

You would now have gone about 400 miles with two stops. Not as ideal (for some) as driving 400 miles with one stop, but not a deal killer if what you take is a Thanksgiving trip to Grandma's once a year.

For the person whose longest drives are to the airport, an EV would work just fine. And 0.25 kWh per mile at $0.105 per kWh is sweet.$0.026 per mile.

It's less than half the $0.063 for$5 gas in a 80 MPG ICE. And you have to add in oil/filter changes, more repairs, shorter brake life, and filling your tank in inclimate weather. (Don't sell that last item short. There are a lot of people who would rather plug in inside their own garage 2-3 times per week that stand out in the rain/scorching sun.)

Renault is also building EVs which have swappable batteries. Fully charged battery faster than you can fill your tank and you don't even have to step out of your car.

"What is the deal with range anxiety? Why would drivers not bother to look at their "fuel" gauge on EV's, but they manage to remember to do this with a gas powered car?"

Even near term EVs are going to be smart enough to deal with range/charge point issues. The car's GPS will monitor vehicle location and post nearest charging points as range is used up.

For those who need it, I'm sure someone could write a "Get a Charge Dummy!" shouted from the back seat app.

EVs won't initially be for all. Probably ten percent of drivers will have critical range issues. But when we look at cars like the Tesla Model S with a 300 mile range which could soon go to 450 with Panasonic's improved batteries we should find that ten percent dropping close to zero.

Remember, an 80% rapid charge would add on another 360 miles for the day.

@Treehugger
You seem to have the minority view on lithium here. Maybe you should do a little more research. Maybe you are not correct. You are quoting low (probably old) numbers and failing to consider this is just the known reserves. Lithium supply has only recently been considered an issue. Nobody has been looking for it until very recently.

http://www.evworld.com/article.cfm?storyid=1434 “Lithium in Abundance” – April 2008
“Evans pointed out that a single geothermal well in southern California can produce enough lithium to meet all of the world's current demand for lithium.” “There are also lithium-bearing clays called Hectorite and oilfield brines that contain commercially-viable concentrations of lithium, though they would be more expensive to produce” “He estimates it at 28.4 million tonnes of lithium, which is equivalent to 150 million tonnes of lithium carbonate. Current world demand is 16,000 tonnes.”
“His conclusion is that "concerns regarding lithium availability for hybrid or electric vehicle batteries or other foreseeable applications are unfounded."
http://www.worldlithium.com/Home_files/An%20Abundance%20of%20Lithium.pdf “AN ABUNDANCE OF LITHIUM” by R. Keith Evans – March 2008

http://www.newscientist.com/article/mg20427385.700-battery-lithium-could-come-from-geothermal-waste-water.html - December 2009
“Battery lithium could come from geothermal waste water”
“A GEOTHERMAL power plant in California will soon be producing more than just electricity.”
“The valuable metal lithium could be extracted from its hot waste water.”
”geothermal waters at the Salton Sea, about 250 kilometres inland and on top of the active San Andreas fault, are just as lithium-rich as the most productive brine lakes in Bolivia and Chile. Simbol says Salton's waters can be exploited with a much smaller environmental footprint.”

More on lithium...

Bolivia seems to have about half the world's reserve base.

Between Australia, Canada, and the US there's enough reserve to supply about a billion EVs.

China could supply a billion. Brazil could supply a billion.

Overall, there seems to be enough for around 10 billion EVs.

And that's before we start getting it out of sea water.

http://en.wikipedia.org/wiki/Lithium#Occurrence_on_Earth

I think people got spooked over "production", confusing it with "occurrence". Production is currently limited but that can be easily changed. We used to process lithium in North Carolina before China low balled the market and caused our plants to shut down.

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