Battery EVs Seeing Growing Momentum

Article By : Egil Juliussen

Demand is building, but battery EVs still require performance improvements and technology advances.

Battery electric vehicles (BEVs) have gained tremendous momentum over the last several years, exceeding the auto industry’s previous expectations of future impact. Nearly every automaker now has plans to make BEVs their dominant product family within the next decade or so. Three years ago, most OEMs had plans to introduce BEVs, and few expected or planned for BEV dominance before the late 2030s at the earliest.

About a year ago, I wrote two columns on BEVs and their prospects—a reasonable assessment at that time.

There are two main electric vehicles categories: BEVs and PHEVs. BEV propulsion is based on batteries only. The plug-in hybrid electric vehicle uses both batteries and an internal combustion engine. BEVs are the long-term winner, hence the focus of this post. While medium and heavy truck segments are also moving to use batteries or fuel-cells, they are not discussed here.

What are the factors that made the auto industry change so fast so quickly? The table below summarizes my perspectives on this question.

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Tesla

There is no question Tesla is the most important factor behind BEV momentum. First, Tesla changed the perception of what a BEV can be—from an entry-level vehicle with dull features to a luxury car with amazing acceleration and exiting features.

Next, the Tesla S became a favorite among a large portion of luxury car buyers. The high-tech positioning from whole-car OTA software updates added to its growing reputation. The unbelievable pre-order volume for the Tesla 3 (more than 500,000 units) showed the demand for BEVs at a reasonable price point.

As a result, Tesla’s unit sales went from 100K units in 2017 to 500K units in 2020. In the pandemic year of 2020, when all major OEMs had declining sales, Tesla sales volume grew more than 60 percent. Production volume grew 76 percent in 1Q 2021 compared to 1Q 2020 (180,000 units vs. 102,000 units).

Tesla’s factory expansion also created a buzz that its OEM competitors could not miss based on extensive media coverage. First, it was the rapid production buildup in Tesla’s Fremont, Calif., factory, including frantic growth of Tesla 3 production in 2018. According to Tesla, the Model 3 became the best-selling luxury car model in the U.S. in 2018.

In 2019, Tesla launched construction of its Chinese factory. Tesla’s Shanghai facility is owned by the carmaker and is not a joint venture with a Chinese company—previously a standard procedure for overseas companies. Construction started in January 2019, with volume production commencing in December 2019—exceptionally fast for the auto industry. Annual production volume in Shanghai is around 500,000 units. In 2020, Tesla sold 140,000 BEVs, which made it the top BEV brand in China.

Tesla is also in the process of building production facilities in Berlin, Germany, and Austin, Texas. The Austin plant is scheduled to be completed by the end of this year, and perhaps sooner. The Berlin plant was also scheduled for late 2021 but it appears there could be delays of up to six months.

Tesla’s stock price is also a media story due to its wild ride and exceptional high value based on traditional financial metrics. All of these trends have given Tesla tremendous visibility—mostly positive, but altogether helping Tesla drive the BEV industry forward.

Volkswagen

VW is the second largest factor in creating BEV momentum. It made a strategic commitment to develop BEVs after its diesel scandal. This was a good choice for VW, and it is now starting to pay off.

VW’s huge BEV investments essentially forced all of its major competitors to follow and invest in BEVs—some quicker than others. GM was already on the BEV track, but probably accelerated its pace after seeing Tesla’s success and VW’s rapid BEV investments—from model announcements to production and battery factory investments.

A good overview of VW’s current and future BEVs and technology data is here.

Battery price declines

The rapid price decline for batteries is a major factor in the rise of BEV interest, eventually bringing price parity to BEVs compared to internal combustion engines. When battery costs reach $100 per KWh, there is general agreement BEVs will be equal to the purchase price of internal combustion engines for many vehicle segments.

Battery costs declined by about 80 percent between 2013 and 2020, with further price reductions expected over the next decades. Bloomberg reported last December that the price of a single KWh at the battery pack level had dropped to $137 in 2020 compared to $668 in 2013.

For the first time, battery pack prices of less than $100/kWh were reported in Bloomberg’s 2020 battery price survey for multiple categories of BEVs—passenger cars, buses and commercial vehicles.

Bloomberg forecasts that battery pack prices will decline to $58/KWh by 2030. It predicts multiple paths to reach this price projection.

It is projected that investments in battery production volume and technology advances will make BEVs price competitive with internal combustion engines by the 2023-2025 timeframe, depending on who you ask. By 2030, BEVs will be significantly less costly than gas burners.

Buying incentives

BEV buying incentives have already made an impact and will continue to do so. Those incentives were most important when BEV prices were much higher than conventional vehicles. The incentives varied by country and region. Local BEV incentives are also available in some U.S. states and other regions. As BEV prices decline, buying incentives are less important. BEV incentives will remain important for a few more years, but their impact will decline and is likely to disappear after 2025 in most regions.

Regulations curbing sales of vehicles powered by internal combustion have been passed in three states. California and Massachusetts have set 2035 as the last year of ICEV sales. Washington opted for 2030. There will, of course, be many gas-powered vehicles on the road long after those dates, with most driven for up to 15 years after purchase.

More than 15 countries have passed laws, proposed laws or set tentative dates for when ICEVs will no longer be sold—generally listed as mid-2030s. They include Belgium, Canada, Denmark, France, Germany, India, Ireland, Israel, Japan, Netherlands, Norway, Sweden and the U.K. Many other countries have proposed restrictions on diesel vehicles.

Many cities are also proposing or passing laws to ban internal combustion sales. Over 20 cities in Europe, South Africa and the U.S. are on this track. Many other cities ban diesel sales or use.

Such dates could be delayed, but there is no question that vehicles power by internal combustion engines are on the decline, a decline that will hasten after 2030.

Those bans are due to emissions and resulting negative social impact. Despite large auto industry investments and success in lowering emissions over two decades, it has not been enough. The reason is that for every gallon of gasoline used in a car, 19.6 pounds of CO2 is generated. Diesel is even higher at 22.4 pounds of CO2 per gallon.

The large, temporary decline in CO2 emissions during the pandemic revealed that ICEVs are a major source of emissions. That has added impetus to efforts toward strengthening limits or banning internal combustion engines while increasing incentives to switch to BEVs.

The BEV advantage is no emissions at place of use. Emissions are created where electricity is generated, which varies greatly based on what electricity generation technology is used.

Norway, where about 90 percent of electricity is generated by hydro-electric power, represents a good example of where BEVs should be promoted. Electricity generated by coal has high carbon emissions. If you have solar panels on your roof with battery storage, then charging a BEV in the garage is an eco-friendly option.

Future electricity generation will produce less emissions due to the rapid shift to renewable sources and lower emission technology (natural gas instead of coal). This means that future BEV use will have less indirect emissions based on electricity used.

Owner advantages

Gasoline or diesel costs vary greatly by country and by region in the U.S. There are also great variations by year and hence much uncertainty regarding future gas prices. The consumer price of a gallon of gasoline varies greatly between the U.S. and European countries, where gas prices are as much as six times higher.

The price of electricity is more stable, and much lower than the equivalent gasoline price per mile driven — in the range of 50-70 percent of gas prices. In the U.S, there will be more taxes on BEVs to pay for road maintenance. Hence, the fuel cost advantage of BEVs is expected to narrow as states start taxing BEVs by miles driven.

BEVs also have lower maintenance costs due to fewer moving parts and total parts than internal combustion vehicles. This trend is starting to show up in maintenance statistics.

Lower fuel and maintenance add up to lower operational BEV costs. In most cases, the result is lower lifetime costs for BEVs versus internal combustion—even when the BEV purchase price premium is included.

The option of home charging for BEVs is another benefit, working primarily for BEV owners with a “gas-station” in the garage. It is slow charging and will usually be an overnight task. For most BEV users, the average charge frequency is about once per week.

Then there is the silent running BEV—a plus for most owners—along with torque capabilities of electric motors that provide rapid acceleration.

Currently, most BEVs have battery capacity in the 60-KWh range. This is enough to power a typical home for a day or two. This makes a BEV a power backup when electric power is lost, although some wiring additions are required.

In sum, BEVs are on the way to become the dominant powertrain for the automotive industry. BEV momentum has picked up during the last three years. Most OEMs are now committed to moving from internal combustion to BEVs in a decade or so for the vast majority of their vehicle sales.

Still, skeptics remain: BEVs will need more improvements and technology advances. These are on the way due to extensive investments in the necessary technologies from multiple industries.

We’ll explore those trends in a later column.

This article was originally published on EE Times.

Egil Juliussen has over 35 years’ experience in the high-tech and automotive industries. Most recently he was director of research at the automotive technology group of IHS Markit. His latest research was focused on autonomous vehicles and mobility-as-a-service. He was co-founder of Telematics Research Group, which was acquired by iSuppli (IHS acquired iSuppli in 2010); before that he co-founded Future Computing and Computer Industry Almanac. Previously, Dr. Juliussen was with Texas Instruments where he was a strategic and product planner for microprocessors and PCs. He is the author of over 700 papers, reports and conference presentations. He received B.S., M.S., and Ph.D. degrees in electrical engineering from Purdue University, and is a member of SAE and IEEE.

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  1. Donald Higley says:

    Great article. The battery technology and options coming out could influence this rapid switch to EV vehicles. Are care companies working on Sodium Ion batteries as opposed to Lithium Ion Batteries?